Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Drug Misuse

Motion made, and Question proposed, That this House do now adjourn.—[Ms Quin.]

Mr. Peter Bottomley: I thank the Minister for moving the motion, and welcome her to the Front Bench.
It may help if I give the accepted definition of drug misuse. It is best defined as the non-medical use of drugs intended for use only in medical treatment and the use of drugs that have no accepted medical purpose. Such drugs are controlled under the Misuse of Drugs Act 1971. That Act does not cover solvent misuse.
The main drugs that are misused are opiates, such as heroin; stimulants, such as cocaine, amphetamines and Ecstasy; tranquillisers; hallucinogens such as LSD; and cannabinoids, such as cannabis.
First, let me say that I have done plenty of things that I ought not to have done. I am not an expert on drugs but I want make practical suggestions on the culture that affects the number of people who take up drugs and the way that they use them in front of other people and what might be an additional effective way of coping with the undoubted problems of drug misuse.
To those who want to consult the real experts, I commend a book by Commander David Stockley called "Drug Warning". It is subtitled "An Illustrated Guide For Parents, Teachers and Employers", and is published by Optima.
David Stockley was a commander in the Metropolitan police. The information is factual. I recommend that parents who find that their child is involved in drugs read the book so that they understand what is involved. The author reminds us of some of the warning signs that a young person may be using or experimenting with drugs. He says that there is no simple answer, but mentions out-of-character behaviour; loss of appetite; being either unusually sleepy or unable to sleep at night; bouts of talkative, excitable and overactive behaviour; being unusually irritable, aggressive or even violent; changing moods, from happy and bright to moody and confused, for no apparent reason; telling lies or acting secretively; losing interest in school work; and truanting. He further mentions changing friendship patterns; losing interest in hobbies and sports; money or valuables disappearing from the home; coming to the notice of the police for unruly, disorderly behaviour or dishonesty; unusual spots, sores and marks on the body or arms or around the mouth and nose; and stains and chemical smells on clothing and about the body.
I read that list not to frighten people—although some aspects of the misuse of drugs may be frightening—but because when people get involved in something that they regret, or will probably come to regret, it is important that they do not go on experiencing their problems alone. It is important that those around such people, especially young people—parents, teachers and people in the community—are in a position to ask whether there is a problem and say that it ought to be shared with them. Young people should not go through difficulties alone. It weighs and preys on them and changes their lives unnecessarily.
I want to acknowledge, although not concentrate on, another point. I realise that the debate will go wider than my contribution. Most crime is not drug-related, but some people involved in drugs, especially the heavier end of drugs, are responsible for irruptions of crime that can be severe in local areas. When we lived in Stockwell, there was a drug dealer in the block of flats opposite. When that flat was in constant use, the amount of crime in the area was horrendous. People might expect almost weekly to suffer some assault on their car, their home or themselves. I do not want people to get the idea that all that we have to do to solve crime or drugs is take away the criminal behaviour that surrounds drug dealing and some of the pushers, however. I do not wish to go into crime in great detail, but it matters even on a small scale.
I talked to a constituent in Worthing last week. She was an elderly woman who had lost a locket given to her by, I think, her godmother. It was of no particular value to anyone else. Its street value was probably so trivial that a smoker who did not smoke cigarettes for a day would probably save the same amount. To my constituent, however, it was a link to someone who had mattered a great deal to her. I do not want to start bringing out the tears for all these things, but they show that it is worth working hard to deal with such behaviour and try to reach a level, which I hope we can reach in this country, at which crime, or at least personal crime of the kind that I have described, is virtually unheard of.
The leadership given by the Government on drugs will be welcomed. I hope that they make progress. The work is built on the work that Tony Newton led when he was Lord President of the Council, and on the 1994 document "Tackling Drugs Together", the annexes to which contained not only information about the link between drug misuse and crime but an overview of drug misuse statistics. Obviously, only a part of the figures can be known, but it is important that, in our monitoring of progress and setting of targets, such an approach is brought from the annexes to the front.
I wish to draw a parallel with the experience of tackling drink-driving, with which I was associated for a time. If we run campaigns on drink-driving in accordance with the temporary interests of the media, we are unlikely to get it right. We had to have some sense of the incidence and pattern of drink-driving, the people affected and where it happened. We need an approach that will get at the culture of people doing things that are wrong. Clearly, drinking is not unlawful and driving is not unlawful, but the combination of the two is.
We spotted that we would not make progress without dealing with young men. There is a parallel with drug misuse, which is predominantly, although not exclusively, a young male activity. We realised that, if we did not deal with young men and their drinking and driving, where they drank, and the type of social life that they had, we


would not be involved in the areas in which we could make a difference, or get them to make a difference. We spotted the fact that they were the ones who had to make a difference—one of the themes of what I want to say this morning.
We—society, not the Government—cut drink-driving by young men from about 2 million occasions a week to about 600,000 occasions a week within two years, with no change in the law, sentencing or enforcement. So two thirds of an illegal, socially unacceptable, body-damaging habit evaporated. The reason why it happened is not known to most people, because, although it is perhaps the biggest cultural change since the war, there has not, to my knowledge, been a five-minute radio or television programme or a 600-word article in any of our broadsheet newspapers about how it happened. Although I occasionally say out loud what my view is, saying it before the House of Commons is probably the best way of keeping it a secret. But I will try anyway.
Ten years ago young people listened in large numbers only to Radio 1, the only national pop music station. No other cultural medium was accessible to most young people. When Johnny Beerling, the controller of Radio 1, said that drink-driving issues should be dealt with in news and current affairs on Radio 1, we knew that the right audience was being involved. People were not being preached at, but they were involved.
Pop music stations are now more diverse. Radio 1 does not have the same dominance, although it is still important. I commend to youth magazines and radio the importance of raising drugs issues as news and current affairs. It should not be a public service message from a 44-year-old Minister—I do not know how old the Minister is—but probably a discussion led by a 58-year-old disc jockey. It is important to make the message part of people's culture if we want to spread information and give people choices.

Mr. Paul Flynn: How does the hon. Gentleman react to the week-long debate on cannabis that was conducted on Radio 1, in which 25,000 people rang in to give their opinions, of whom 87 per cent. said that they wanted to see cannabis decriminalised?

Mr. Bottomley: If the most important issue in a week-long discussion on Radio 1 was whether cannabis should be decriminalised or remain a criminal offence, I think that Radio 1 missed the point. Decriminalisation of cannabis may be an issue of some interest, but what really matters is the information given on page 31 of The Express yesterday. When young people were asked:
Are you worried about the effect of drugs on yourself?",
40 per cent. said yes. I do not know whether the question distinguished between misuse of illegal drugs and pharmaceutical drugs, but if 40 per cent. of young people say that they are worried, that strikes me as a worry that we ought to share. We should not share our worries with them; we should share their worries.
When young people were asked:
Do you think drug use is spreading to younger boys?",
87 per cent. said yes. If 87 per cent. are worried, we should share their worries. We should not try to impose ours on them. It is in the nature of politics that relatively

few people are elected to the House of Commons at the age of 21. Bernadette Devlin was and Paul Channon was, but I am not sure that many others have been. By our nature, we are rather older. So if 60 per cent. of young people say yes when asked:
Are you worried about the effect of drugs on someone else?",
we should be concerned and share those worries.
My part in this debate is not to discuss whether things should be criminalised or decriminalised. It is to consider whether the House can start taking the worries about misuse of drugs as seriously as we appropriately did the worries about drink-driving.
Drink-driving now kills about 550 people a year. In the 1994 document "Tackling Drugs Together", the statistics show that deaths through the misuse of drugs number way over twice that figure. They are at the level at which deaths from drink-driving were when I became an assistant Minister at the Department of Transport in 1986. So the hon. Member for Newport, West (Mr. Flynn) has rightly, indirectly, pointed out the importance of having this debate and cutting the number of people who start to misuse drugs and the number of years or months for which they are involved in drug misuse, and of being far more open about what is happening.
At this point I want to come on to my second major point—my second of two. I have one or two other things to say, but the two major points are, first, that we must take a cultural approach in addition to other things that are happening. The Minister may explain what Keith Hellawell is doing. She may talk about the Government's update of the "Tackling Drugs Together" approach. My contribution is, first, to say that we must make the cultural approach to the misuse of drugs important. That means information, understanding and action that does not rely only on policemen, the courts and sentencing.
My second point is that it is outside my experience, but within my perception, that young people are not sold unlawful drugs the first time they are offered them. They are given drugs. If I am wrong in that and if young people are listening to this debate, they should let me know. I believe that almost every young person experiencing drugs for the first time, and possibly for the second, is given them by a friend, but after that, we are back into what research evidence shows. When people who are misusing drugs are asked where they get the money from, a significant proportion say that it comes from selling drugs to other people.
In effect, drug dealing is a pyramid-selling operation. I am told that I should not make comparisons with psychotherapy or Holiday Magic, but it seems to me that, if someone is on drugs, unless they happen to spend very little or are very wealthy, they are likely to get some of their money for their habit by selling drugs on to other people. To do that, they have to have a network and they cannot build that simply by happening to meet people at large parties or on the street. They are likely to ask their friends or people in contact with them, "Would you like to have some of this?"
Later on, when those people say that they would like some more, they say that the drugs have to be paid for. Once that happens, the pyramid goes on down, which ends in avoidable disadvantage, stress and handicap for the person who gets hooked. It also involves avoidable disadvantage, distress and handicap for those who become victims of crimes. The scale of crime that is necessary to


produce money to fund a drugs habit and the amount of cash paid to the person supplying the drugs is disproportionate to the great suffering caused.
Young people should be warned that the first time they are offered drugs it will probably be for free. They need to know that in advance: there is no point telling them afterwards. People have a choice whether to start using drugs or not to continue using drugs, having experimented with them. We should make the same plea as I make to smokers—I say that as someone who smoked for many years: I am still addicted, but I have not smoked for some time. They should try not to smoke in front of someone who is younger than they are. That would have been bad news for Deng Xiaoping, because he was one of the oldest people in China.
If we have a habit that we do not think should be spread to other people, we should try not to indulge in it in front of others. We may do it privately. However, 12-year-olds will be influenced if they see 14-year-olds taking drugs. They in turn will be affected if they see 16-year-olds taking drugs, who will be influenced if they see 18-year-olds taking drugs and so on up the age groups.
The information should be out in the open, and we should monitor the situation. If the Government's approach is working, it should show up not in the newspaper headlines—because newspapers and the media require more rapid results—but in the figures such as we had in the drink-driving campaign. Twice a year we had a pretty firm indication of whether drink-driving behaviour and the answers to questions about drink-driving were changing in the prime target group.
In 1987, if young men were asked, "Do you have to drink at a party to enjoy yourself, even if you are driving home?", the predominant answer was yes. By 1989, the predominant answer was no. That was associated with a change of culture. In 1987, the predominant answer to the question, "If you say that you're not going to drink at a party because you are driving home, will people think that you are a wimp?", was yes. By 1989, the predominant answer was no.
We need such a change of culture. If young people now were asked, "Do you think that misusing drugs is a sensible, good or cool thing to do?", I do not know what answer they would give. Such surveys are needed every six months or so, and the figures should be examined for each age cohort to establish trends over time. That may not draw much attention, but it helps those responsible for improving the position, and that is not only the Home Office, the Department of Health and parents groups—not that we have many effective parents groups in this country—but many others who want to make a difference and to improve the well-being and welfare of our young people.
Better work has been done over the past eight years and more is to be done in the next four or five years, and if the misuse of drugs is as common as it seems, the results should show a drop in such behaviour. Drug misuse involves people in inner cities and in more rural areas. It affects people who think that they have control over their lives and those who have not. It is not helpful merely to have a discussion such as The Independent on Sunday had about whether some drugs should be made legal. The problem is far more serious than that.
I welcome the sensible parts of the Government's approach. They are continuing the work that had been started under the previous Government. I hope that we

can co-operate on this issue and test whether some of the claims being made make sense. When one listens to people on the streets talking about how they fell into a slough of despond for 10 years because of drugs, and about how they have tried to control their drug habit, one realises how important it is to prevent young people from becoming involved in drugs in the first place.

Mr. Paul Flynn: I congratulate the hon. Member for Worthing, West (Mr. Bottomley) on securing this debate. I pay tribute to him for his personal crusade against drink-driving, which saved thousands of lives. However, I believe that his approach to the problem of illegal drugs is not as developed as his successful case against drink-driving.
It is a unique pleasure to congratulate a Government on an illegal drugs policy. I am delighted to see the Minister of State, my hon. Friend the Member for Gateshead, East and Washington, West (Ms Quin) on the Front Bench. She has always dealt thoughtfully and pragmatically with my questions and with the matters that I have put to her. As was shown yesterday, the Government have adopted a drugs policy that does not seek popularity by appearing to be tough. They took an intelligent decision. The Government attitude to drugs in the past 30 years has been bedevilled by attempts to seek policies that are popular in the pages of the tabloid newspapers, but such policies do not work.
I challenge any view that drugs policies—either those of Tony Newton or of the present Government—are working. According to the only European measure of the harm being caused by drugs, which is from the Lisbon monitoring group, the drug problem in Britain is the worst in Europe. Heroin deaths have doubled in each of the past four years. Drug-related crime in this city has increased by an enormous amount in the past year. The Government and the drugs tsar admit that Britain is facing a new epidemic of heroin use. Virtually nothing that we have done has worked.
We cannot exaggerate the difficulties: this is the greatest problem facing Europe, and our peace and stability is threatened by the drugs mafias and cartels in the newly democratised states of eastern Europe. Drug cartels in countries such as Turkmenistan, Uzbekistan and Afghanistan, where the Taleban have decided that heroin is a gift from Allah and they are using it to fight their wars, have become so powerful that they can buy Governments. Such cartels make money mostly from drugs, although they are involved in prostitution and other crimes. In Colombia, there is a war between the drug barons and the Government, and we know that the forces of organised crime will win. This extraordinary, unrecognised problem of international crime in Europe threatens the stability of our continent. The problem of money laundering will be greatly simplified by the introduction of the euro.
As with the rise in criminal activity during the prohibition era in America between 1920 and 1933, these cartels have developed because there is only one market for the drug in demand, and that is an illegal market run by criminals. In Britain, even children of 13 can obtain drugs. The figures from the Department of Health show that 70 per cent. of men and 47 per cent. of women have used an illegal drug by the time they reach the age of 24. The market is saturated. Where do they obtain illegal drugs? The only source is irresponsible criminals.
Our only hope of reducing drug harm is to collapse that illegal black market. Drug dealers are committing the same crime if they sell a drug to a neurotic 10-year-old as they are if they sell it to a well-balanced 50-year-old. As in America in the 1930s, we have to collapse the market and replace it with a market that will not be harm-free, but will be licensed, regulated, policed and controlled. Then, if someone sells a drug to a minor or to someone with a known mental illness, they will be put out of business.
That is not just theory; it has happened in Holland. There is much black propaganda about Holland. In the past 18 months, I have been there three times—the last time with someone who was teaching young people in schools about cannabis. She explained to the Dutch that the problem with cannabis was that it made men impotent and women promiscuous, which is about as unsatisfactory a situation as one could imagine. It was interesting to see how so many Dutch men were willing to be generous with their time and energy and prove to the lady that the effects of cannabis on men were very different from what she imagined. That is the type of nonsensical propaganda that is preached about drugs.
This morning, we know that the Government have at last differentiated between cannabis and hard drugs. We must emphasise that there is a huge difference between the effects of a hard drug—a virulently addictive drug, such as heroin or tobacco—and those of drugs that are far less harmful. No drug is without harm, but young people use some drugs for a short time and then get over them. For the first time, in their prison policy, the Government are distinguishing between hard and softer drugs. I hope that, before long, a new policy will be announced on the exchange of needles in prison.
At the moment, cannabis is used as a drug of choice among young people. The hon. Member for Worthing, West rightly said that we should try to influence young people's views. There is a huge gulf of opinion between the current generation's experience of drugs and the experience—not mine; I have never had any experience of any illegal drug—of older generations. Nearly all the premature deaths of hon. Members in my time in Parliament have been the result of drug use. People are shocked when one says that.

Mr. Bottomley: Booze and fags.

Mr. Flynn: Several hon. Members' deaths were hurried by the use of alcohol, and many by tobacco; and at least one hon. Member was taking a near-lethal dose of a painkiller every day. I have often raised points of order in previous debates when the principal speaker on the Government side and the principal speaker on the Opposition side have been obliged to leave the Chamber for a fix, because they were both chain smokers.
The hon. Member for Worthing, West spoke about the first use of drugs. Heroin is now smoked, as cannabis is almost universally smoked, in this country. The gateway drug is tobacco; that is what draws people in. People's first drug is not cannabis or heroin, but tobacco, and hard drugs are often taken under the influence of alcohol.
The problems of drug use in this country are principally the problems of tobacco, alcohol and medicinal drugs. To find the place in any town in Britain with the largest

number of people zonked out on drugs—walking around like zombies, incapable of communicating—we should go, not to some back alley to see the heroin addicts, but to a residential home, because 88 per cent. of elderly people in such homes are subjected to the use of neuroleptic drugs that they do not need.
There is enormous misuse of antibiotics and medicinal drugs on animals in this country. The animals do not have illnesses, but drugs are used to promote growth and to prevent illnesses that they might get.
Drugs are misused on an unimaginably vast scale. Significantly, every year 120,000 people die of tobacco use; between 25,000 and 40,000 of alcohol use; 2,500 of medicinal drugs; none of cannabis—whose pathology I shall discuss later—and about 180 of heroin. Unfortunately, it is said that solvents should be removed from the equation, but as many as 100 people die from solvent misuse.
The myth has been perpetrated—and is believed by most parents—that if a young person starts to take cannabis, inevitably they will go through a sequence of events and end up dead in a dark alley, with a needle sticking out of them. In fact, there is as much chance of a cannabis user going on to heroin as there is of a social drinker becoming a wino or alcoholic, for the same reasons.

Mr. Nigel Evans: Some people listening to the debate must ask themselves, "What is the hon. Gentleman on, to come out with some of the stuff that he is saying this morning?" He is trying to paint a picture of cannabis as an okay drug. It is made up of 400 chemical compounds, and doctors say that, in itself, cannabis is an extremely damaging drug. If we go down the route that the hon. Gentleman is suggesting, and allow a free-for-all—decriminalisation and legalisation of cannabis—does not he expect that, even with his licensed control and his licensed market, far more drugs will be available, and far more people will take drugs, than at present?

Mr. Flynn: The hon. Gentleman is a drug pusher—I have called him that in Parliament before, and I repeat it—because he runs a convenience store that sells cigarettes. It is cigarettes that lead people into cannabis and into heroin. If the hon. Gentleman is serious, he should read what the World Health Organisation said about cannabis—that if cannabis was used as cigarettes were used, it would not be as dangerous as cigarettes. [Interruption.] Wait a minute; let me finish what I am saying. However, cannabis is not used that way. No one smokes 40 cannabis joints a day—they normally use one, possibly two, at a weekend—so no reputable scientist would say that cannabis was as dangerous as heroin, cigarettes or alcohol.
However, that is not the problem. We must consider young people's drugs of choice and ask how we may deal with them in a practical way. I return to the case of Holland. I am not saying that anyone should take any medicinal or illegal drug; I should like people to take as few of them as possible, and preferably none. However, remarkably, in Holland, as a result of decriminalisation, the two markets have been separated, and cannabis use has not increased. In Britain we have almost reached saturation point with cannabis, but in Holland, any outlet that sells it to young people is closed.
The most significant effect of decriminalisation in Holland has been the effect on heroin use. In the Dutch population, it is almost unknown to find a heroin user under the age of 20, and since 1981 the average age of the heroin user has increased from 28 to 41. A larger proportion of heroin users are in their 60s there. Holland has half the proportion of heroin users to the general population that we have in Britain, and the number is decreasing. Meanwhile, the average age of heroin users in Britain has decreased from 29 to 28, and the drugs tsar says that heroin is being used by 13-year-olds.
Young people throughout the world are experimenting with soft drugs; nothing can stop that. We are not even trying to stop the use of Ecstasy. Ninety per cent. of young people at raves use Ecstasy, and the police no longer arrest them for doing so. The law is being ridiculed.
In prisons, drug use is endemic. This week, I asked the Under-Secretary of State for the Home Department, my hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth), how many prisons he expected to be drug-free in the lifetime of this Parliament, and the Government have yet to come up with an answer. That target is probably unattainable. If we cannot keep illegal drugs out of prisons, behind high walls, where people can be searched, where is the hope of keeping them out of clubs, raves and schools? We have lost that battle, and we can only ensure that, if those drugs are used, they are used in a way that causes least harm.
As a young man, I was told not to drink beer and not to smoke, and very soon we all went out and got into Woodbines and bitter beer because there was peer pressure on us to do so. Today's young people will be given similar warnings—we all say such things to our teenage children, myself included. However, if we had all told our teenage children, for example, "Don't take Ecstasy" but then said, "If you do, don't overheat, don't drink more than a pint of water an hour and don't take Ecstasy with any other drug," and if they had followed that advice, there would have been no Ecstasy deaths in Britain, because no one dies from Ecstasy alone. In Holland, there have been no confirmed cases of deaths resulting from Ecstasy, or solvent abuse.
Switzerland can also teach us lessons about hard drugs. That country has had all kinds of problems, especially with drug tourists.
In a recent referendum, 70 per cent. of the Swiss people approved of a proposal to treat confirmed heroin addicts not as criminals, which is futile, but as patients. Trials had shown that if addicts were given heroin—not methadone, which kills more people than heroin—in a rehabilitation scheme, there was an immediate drop in crime because the addicts did not have to become burglars or continue with other criminal activities or prostitute themselves to get money. They can relax, get their heroin and try to get off the drug and lead a normal working life. That policy has worked splendidly in Switzerland. It has had massive approval and is being adopted throughout the country.
Italy, Spain and 20 American states have decriminalised cannabis and in every case there has been no increase in its use. We must understand that. Britain is following the so-called tough policies of the United States. For 30 years the USA has conducted wars against drugs. It has bombed and defoliated the drug crops in its own country and elsewhere and has imprisoned some drug

users for longer than murderers. It has had three drug tsars. The present one is a disaster and is known as the drugs nanny. The result is that Mexico now rivals Colombia as a source of drugs, and America faces the greatest ever use of heroin. Meanwhile, marijuana use goes up and down, as its use has nothing to do with prohibition. When there is a demand people will get the drug, and the USA has the worst drug-related corruption in its history.
The policy of prohibition has never worked anywhere. When a drug is in demand, there is a ready supply and people will get it. Drug education is a blind alley, but it figures prominently in the drugs tsar document and the White Paper. The policy is based on Operation Charlie. Photographs were taken of the drugs tsar and the Lord President of the Council in a school, and on that basis it is said that drug education will work. The absurd claim is that it will work by means of Janet and John lessons given to five-year-olds. Cynics might say that that is a convenient escape from intelligent thought, because no one will be able to tell whether the policy is working for at least 15 years, by which time the drugs tsar will have retired and Labour will be in its fourth term of government.
What is Operation Charlie—the operation on which is based the myth that drug education reduces drug use? It is difficult to get details or answers, but I received some a couple of days ago. Did it involve thousands of people over tens of years? It involved 43 young children over the period of a year, and people are reaching conclusions on that basis. A report has been presented about the effects of the Ecstasy sorted campaign last year. I begged the Government to give me a copy, and they supplied assorted pages—pages 7, 8, 9, 14, 20, 87 and 64. They are concealing from me what I know. Perhaps they will admit today that the effects of the sortie campaign—which was a well-intentioned response following the death of Leah Betts—was to frighten parents, unreasonably so. However, it increased Ecstasy use.
There is a wealth of evidence from all over the world, and especially from America, that drug education increases drug use. The worst example was in the 1950s in America, where there were serious drug problems in all the major cities. It was decided to solve them by means of drug education using teams of ex-drug users. Those people had been through everything. With their long hair and guitars, they explained to the kids that drug use was bad. They said, "Look at us. We have been through it. We have been through all the drugs and have experienced degradation and sexual orgies. Drugs are wicked and dangerous and your parents do not want you to use them." One could not imagine a more irresistible recipe for young people. Young people know that they are immortal, and they are risk takers.
The policy of exaggerating the danger of some drugs has the appeal of forbidden fruit to young people. Much of what we have done is futile, and the evidence for that is in the figures. The Government have presented some figures to show that problems have evened out. I ask the hon. Member for Worthing, West to look at the figures which I shall send him showing what has happened over the past 20 years. There has been a continuous rise in all drug problems in Britain, including an increase in drug deaths and drug-related crime.
Our policies are not working, but the White Paper suggests that we should continue to implement them. There is next to nothing new in the White Paper. We must recognise that the only way to reduce drug harm is to separate soft drug use and hard drug use. We are learning about cannabis and I am sure that hon. Members will relate stories about its damaging effects. I am not suggesting that it should be used other than by people with serious illnesses. We have found two new ways of proceeding with cannabis: I have contributed to a splendid paper on that.
New dangers and problems have been found, but so have new medicinal uses. Cannabis affects the pressure on the inner eye. The Egyptians who built the pyramids 3,000 years ago used cannabis as an eye medicine, and we have now discovered that it reduces inter-ocular pressure. The new danger is that it has damaging effects, but no one suggests that it is an dangerous as the accepted drugs of our generation.
The equivalent of six prisons are filled with cannabis offenders at a cost of £60 million a year. There are plans to build 20 new prisons, each costing about £88 million. That is madness. If we continue to persecute people for using a drug that is less dangerous than, and nothing like as addictive as, acceptable drugs, we shall build up problems. If cannabis is decriminalised, we can save the £3 billion that is estimated to be wasted by prisons, courts and the police service on chasing young people for using their drug of choice. That money could be concentrated on the real drug problems, which come from eastern Europe and south America.
People say that the policy I am suggesting has no chance. It is extraordinary that the hon. Member for North Norfolk (Mr. Prior) is not in his place. He has said that he used cannabis when he was a young man and is in favour of legalisation. He wrote a splendid article about it. Unfortunately, in the atmosphere that prevails in Britain it is more dangerous to say that one is in favour of legalising cannabis than it is to say that one is homosexual. There is more scalding public contempt for expressing an intelligent opinion than for coming out of the closet.
I was shocked on Monday by the gratuitous schoolboy insult that was thrown at an Opposition Member for rightly saying that the use of cannabis in our gaols is seen as a pacifier. There is evidence that the Government accept that. Gaols containing cannabis users are much easier to run. People on the wacky backy are quiet and docile and do not break the furniture as they would do if they were on alcohol. Some prisoners are on alcohol. The only serious Government attempt to clear drugs out of prison occurred at Everthorpe. Every drug, including alcohol, was cleared from that prison, and the result was three days of rioting and a bill for several million pounds to put matters right.
We did not get an intelligent response from the Government. When the right hon. Member for Kensington and Chelsea (Mr. Clark) made his point on Monday, he received an answer unlike the one that we shall get from the Minister this morning.
In America in the 1930s there were those who said that decriminalisation of alcohol could never take place and that prohibition would never end. Many people now say that of drugs. I believe that cannabis will be legalised for

medicinal use in two or three years' time, and for recreational use in four or five years' time. The Government will have to recognise that their policy is not working if they examine what is happening, now and in a year or two, when they are committed to judging it.
An American politician said in 1930 that prohibition would end on the day that a butterfly flew to the moon with the Washington monument tied to its tail. Three years later prohibition of alcohol came to an end. The prohibition of cannabis must come to an end very soon in this country, otherwise we will continue to increase all drug problems.

Mr. Bob Russell: One of the most annoying political falsehoods of recent years is the slur and the claim that the Liberal Democrats support the decriminalisation of drugs. I invite the Minister to confirm that that is not the view of the Liberal Democrats.

Mr. Evans: The Liberal Democrats voted for decriminalisation.

Mr. Russell: The Liberal Democrats are not in favour of the legalisation of cannabis or any other banned drugs. We take the threat of drugs extremely seriously. We therefore proposed a royal commission to examine the threat of drugs and how best we can deal with that threat.

Mr. Evans: Will the hon. Gentleman give way?

Mr. Russell: The hon. Gentleman will have his go in a minute.
A royal commission is required to consider the issues involved more rationally than has been possible in the highly political debate of recent times. With drug use, particularly of soft drugs, being so commonplace, many have questioned the point of fighting against drugs. However, it is important to protect the weaker and more vulnerable members of society, the disturbed, the uneducated, the people who are easily led—
Mr. Evans: Will the hon. Gentleman confirm to the House that the Liberal Democrat conference voted for the decriminalisation of cannabis, and also voted in favour of setting up a royal commission?

Mr. Russell: The policy of the Liberal Democrats is to set up a royal commission, as I have stated. I regret the politicking that is taking place, primarily outside the Chamber. The Liberal Democrats support a royal commission, and many other organisations and individuals have followed that line.
We need to examine the facts rationally so that we can channel resources and strategies towards protecting the vulnerable. We have heard from both sides of the Chamber today that the drugs problem is formidable. The number of drug seizures is growing, as is the number of cases coming before the courts and leading to prison sentences.
The hon. Member for Newport, West (Mr. Flynn) suggested that the number of deaths from drugs could be minimized, but I am advised that the number of deaths in the United Kingdom attributable to the misuse of drugs increased to 1,805 in 1995.
In the context of the global drug problem, we know that raw material production is increasing, as is the production of synthetic drugs such as Ecstasy. The health and social consequences of drug abuse must be addressed. In their White Paper, the previous Government correctly identified the need to reinforce the law effectively and to reduce drug-related crime. There is broad party consensus.

Mrs. Teresa Gorman: Is it not a fact that the fastest-growing crime in our country is burglary, and that a great deal of that is believed to be rooted in the search for money and goods to sell, to pay for drugs? If we want to reduce crime, should we not take a different view of those who take the drugs—which is self-abuse—and of those who are the victims of drug users, because the drugs are so expensive?

Mr. Russell: That was a timely intervention, as I was about to deal with the need to discourage young people from taking drugs. I endorse the hon. Lady's comments about drug-related crime. In my constituency, crimes related to feeding the drug habit are a major issue.
I endorse the sentiments of the hon. Member for Worthing, West (Mr. Bottomley) on the need to get the message home to young people and to discourage them from taking drugs. I should like to think that the hon. Member for Newport, West also agreed with those sentiments, if not with every word that the hon. Gentleman said.
I am concerned about the public health aspect and the need to protect communities from health risks. A constituent of mine was stabbed in her leg with a syringe thrown away carelessly in a black bin liner by her neighbour. That lady now faces six to nine months of worry and anxiety about the health risks to which she may have been exposed. We all pray that there are none.
The Liberal Democrats welcome the White Paper "Tackling Drugs: To Build a Better Britain—The Government's Ten-Year Strategy for Tackling Drugs Misuse". We broadly support the four strands, which are, first, to help young people to resist drug misuse to achieve their full potential in society; secondly, to protect our communities—in Colchester the other week some drug pushers were taken out of society and put in a place that I would like to think was safe, although we know that the drug problem in prisons is growing; thirdly, to treat those with drug problems; and, fourthly, to stifle the availability of illegal drugs on our streets and at schools, dance halls and so on.
We welcome the White Paper as a realistic statement of the issues. We particularly welcome the focus on education for children aged between five and 16. That is the age range at which we should aim, to enable those children to resist the temptation of drugs. The earlier we intervene, the better.

Mr. Desmond Swayne: On what evidence is that premise based?

Mr. Russell: I assume that the hon. Gentleman is referring to the premise that people in prisons are taking drugs. He is a prison visitor. If he does not believe that statement, I suggest that he check it.
We will look to ensure the consistent availability of treatment programmes, rather than the patchy, overstretched provision currently offered. We agree with the Government's vision, but we are disappointed with the level of resources to meet it.
Drugs in prisons, as the Minister will confirm, are a massive problem. We hope that the Government will not take shortcuts in resourcing their proposals to rehabilitate drug users. We support greater continuity of care between prison and the community, especially for those serving short sentences, so that the cycle of drugs, crime and prison is broken.
In conclusion—there is only one conclusion—I invite the Minister to confirm Liberal Democrat support for a royal commission on the drugs culture. Will she give an assurance that the Government will support the setting up of a royal commission?

Mr. Alan Clark: On Monday, the important subject of drug misuse in prisons was raised three times during Home Office questions. The Minister of State, the hon. Member for Gateshead, East and Washington, West (Ms Quin), answered considerately and courteously, and cited statistics to show what the Home Office is doing—on the number of prison dogs and so forth—saying that she hoped that further announcements about Government strategy would be made in due course.
A little later, I asked her colleague, the Under-Secretary, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), a question on the subject and paid him the courtesy of saying:
The Minister may well be serious and sincere in his contention that he is trying to wage a war on drugs in prisons, but, if he looks more closely at the Prison Service, he will find that in many institutions their circulation is encouraged.
That is generally accepted, and I shall cite further evidence in a minute. The hon. Gentleman's answer was very unsatisfactory. Clearly, he had no idea what he was talking about and was blustering—I should have been delighted if the Minister of State had answered. He concluded by saying:
It is simply not true, and it is about time that he,"—
talking about me—
at his advanced age, grew up."—[Official Report, 11 May 1998; Vol. 312, c. 14.]
We all enjoy that sort of thing, but it is usual to rely to a slightly greater extent on the strength of one's argument than on what the hon. Member for Newport, West (Mr. Flynn) called "schoolboy insults".
Had I been so minded, I might have said that, before lowering himself to that level, the Under-Secretary should have assessed his own vulnerability to such remarks by looking in the mirror, because he is—

Mr. Peter Bottomley: He has not finished shaving.

Mr. Clark: Exactly. We should never reduce debate to that sort of level.
It has only been a couple of days since then, and not only have three Labour colleagues approached me about the subject and endorsed what I said, but I have had telephone calls from magistrates saying that it was perfectly true and something that must be brought out, and police officers have confirmed to me the validity of what I said. It is something that is well known.
Today, the Daily Mirror has run a story on the subject, consequent, I believe, on our exchanges in the House on Monday, which states:
Jail bosses are going easy on inmates caught with cannabis"—
by bosses, it presumably means governors—
in a new bid to cut drug abuse behind bars. Instead they will target prisoners using more harmful hard drugs such as cocaine and heroin.
The Minister will tell us whether that is a covert policy. Unfortunately, there is substantial evidence that some drugs—cannabis among them—are tolerated simply because they induce a degree of docility in prisoners, much as other drugs are used in other circumstances to lower the pressure and temperature inside an institution. The hon. Member for Newport, West gave the example of residential homes. That is playing into the hands of the drug barons and people who peddle drugs inside the institution. It is delegating power within the prisons to those who can provide the drugs.
If the hon. Lady were really serious about getting rid of drugs in prisons, she could do it. How? Target one prison at a time and prepare for the fact that the complete elimination of drugs within the building will, in all probability, lead to a riot, as it has done in the past—the hon. Member for Newport, West gave an example. One would have to have the resources standing by and everything available needed to deal with it. One would have to go through the trauma of whatever crisis it might induce, but then the institution would be free of drugs. One could move on from one institution to the next. Such action is perfectly possible—it may well be administratively undesirable and inconvenient. It is not true that one cannot stop drugs going into prisons and being circulated inside the prison walls. If the will is there, it can be done, in one prison at a time, with the maximum application of resources.
The editorial in the Daily Mirror today states:
But why are there drugs in prison at all? They might as well open pubs and nightclubs in them.
Surely being in jail is a good opportunity to put drug-takers on cold turkey and wean them off the addiction.
Admittedly, that is a somewhat crude response.

The Minister of State, Home Office (Ms Joyce Quin): The right hon. Gentleman made some serious allegations when he asked his question on Monday. He said that the circulation of drugs in prisons was being "encouraged" by prison staff and that there was free circulation of narcotics in prisons. First, what hard evidence of that can he send to the Government? Secondly, how many prisons has he visited in the past few months to substantiate those allegations?

Mr. Clark: The answer to the second question is none. One does not need to visit a prison to substantiate accusations of that sort. I will certainly send the hon. Lady a dossier of the people who have written to me, and they include former prisoners. I am surprised that she should try to confront the problem so directly. Perhaps I should have said not "encouraged", but tolerated. I will be very surprised if she really denies that, because she has a completely different reputation to that of her junior colleague. She knows her brief and her subject. Why does

she not talk to the Director General of the Prison Service, who has gone on record and said that, among many other things—
Mr. Peter Bottomley: It was the chief inspector.

Mr. Clark: Yes; I stand corrected by my hon. Friend.

Mr. Flynn: The Minister has been sent copies of evidence given to the parliamentary drugs misuse group not only by the chief inspector of prisons, Sir David Ramsbotham, but by three ex-prisoners—articulate and intelligent people, who said that drug use in prison is precisely as the right hon. Gentleman described it.

Mr. Clark: Yes. The House must allow the Minister to concentrate her mind on the issue. She is denying accusations on the basis of I do not know what briefing from officials in her Department, but she is setting her opinion—and, presumably, their advice—against that of Sir David Ramsbotham and the expressed opinion, based on experience, of police officers, magistrates and former prisoners. That is a tide of evidence that runs so strong that I am surprised the hon. Lady should simply resist it. Unless she accepts it and takes it on board, the strategy to which she referred and of which she has promised us further details in due course—perhaps she can give us a little trailer this morning—will be completely valueless.
I shall conclude, but perhaps the hon. Lady will clearly say whether she denies that the circulation of narcotics in some prisons is tolerated by the staff—I suppose that she has to say that. Will she proceed from that to say that that does not happen and, if so, what she is going to do about it? Does she accept my argument that, if she is serious about the problem, she can tackle it by dealing with one prison at a time, making all the appropriate provisions for disturbance that may follow a genuine attempt to root drugs out of Her Majesty's prisons?

Mr. James Clappison: This has been an interesting debate, and I congratulate my hon. Friend the Member for Worthing, West (Mr. Bottomley) on securing one on such an important subject. I agree with him on many points, in particular his valuable remarks about addressing young people through the medium of youth culture, which is realistic and important. I also agree with his generous tribute to our right hon. Friend Lord Newton, whom we knew better as Tony Newton, the former Lord President of the Council, who played such a leading role in producing the strategy "Tackling Drugs Together". He worked hard to that end.
This subject is so important for so many of our constituents, and I wonder whether the House spends long enough debating it. I do not want to make too partisan a point, but it was noticeable that, on this immensely important and complex subject, out of all the hundreds of Labour Members, only one actively participated, making a passionate speech in favour of the legalisation of cannabis.
The hon. Member for Newport, West (Mr. Flynn) honourably holds the views that he expresses on this subject, and he is something of an expert. It seemed that his speech had been fermenting for some while, and it took him more than a little while to make it. The hon.


Gentleman began with a passionate plea on behalf of cannabis. He went through a list of statistics and arguments and then talked about the legalisation and harm reduction of other drugs. The hon. Gentleman spoke especially about Ecstasy. In itself, his speech was a worrying sign of how easy it is to open the door for one drug, only to find that we are opening the doors for other drugs. That is how the hon. Gentleman's speech left me.
With all respect, I profoundly disagree with the hon. Member for Newport, West. His arguments do not set out any way of tackling the problems of hard and soft drugs. In legalising soft drugs, we would be taking a step backwards, whereas we must take two steps forward to tackle the problem of hard drugs.
The hon. Member for Colchester (Mr. Russell) began by seeking to defend the Liberal Democrat policy, as though that was the most important issue regarding drugs. I do not want to be unfair to the hon. Gentleman, because he is no longer in his place, but it is my distinct recollection that those who attended the Liberal Democrat conference voted in favour of the legalisation of cannabis. That was followed shortly afterwards by a vote in favour of establishing a royal commission on the same subject. That happened after the leader of the Liberal Democrats had become a little agitated. As I said, I do not want to be unfair to the hon. Member for Colchester, because he is no longer in his place. It is right that he made common ground with the rest of us in wanting to fight drugs. It was clear that he realised the importance of this subject.
Indeed, it is an immensely important subject. There can be few of us in this place who do not have, for example, head teachers in our constituencies who are worried about the problem of drugs, or the potential problem, in their schools. There can be few families where parents do not have somewhere in their minds a lurking fear that, one day, their children will come into contact with illegal, controlled drugs. They will be worried about the effects that may flow from that. Sad to say, this is an immensely important subject for millions of families and for communities and schools throughout the country. The Minister must grasp how high are the public's expectations for action to be taken. They want the Government to give a clear lead. They want them to realise the importance of the issue.
Two weeks ago, we had the presentation of the drugs tsar's strategy. The appointment of a drugs tsar was one of the Government's principal initiatives in this context. We welcome any beneficial influence that can be brought to bear on such a complex problem. At the same time, we recognise that in the Government's criteria the position of the drugs tsar is advisory and presentational. The drugs tsar is not responsible for Executive action. We look to Ministers and to the Government generally for a clear lead, commitment and action. Action must be taken by Ministers, who have Executive responsibility, to give the subject of drugs the importance that it deserves.
We think that prevention and treatment are important and that emphasis must be placed on both approaches. With that in mind, we were slightly surprised by the Department of Health's recent consultation paper "Our Healthier Nation". As the Minister may know, it contains barely a mention of the problem of drugs. We think that drugs constitute an important issue in health terms. The mention made of the problem in the consultation paper was to the effect that the Government had a drugs tsar, who was proposing a strategy. For its part, the strategy of

the drugs tsar referred to "Our Healthier Nation" and the efforts of the Department of Health. We look to the Department to give this subject the priority that it deserves.
I do not know whether the Minister can assist us, but we would be interested to know whether waiting lists for drug treatment, for example, are monitored. Any information on that would be welcome. We would be interested to know especially whether waiting lists for drug treatment are increasing, as they seem to be in other areas, or diminishing.
The Government have set great store on the introduction of drug treatment and testing orders. We welcome the orders, but we recognise that, however they may be presented by the Government, they represent only an incremental and possibly even a marginal change to what already exists in the form of probation orders with a condition for treatment. We are surprised that this important new policy, which has been put forward by the Government as one of their principal approaches to tackling the drugs problem, will not be implemented generally for nearly another two years. In the meantime, there will be only a few hundred drug treatment and testing orders in pilot areas. It is something that we shall watch carefully.
We shall watch carefully also how much is made available by the Government in the way of new resources to assist in the treatment of drug problems. The Government set great store by the £5 million that they estimated will be available from the seizure of drug barons' assets to fund health care in this area. Again, we welcome the provision of £5 million, but we would like to know a little about how certain the Government can be that this provision will be made every year.
Can it be guaranteed that £5 million will be available every year? Given the importance of drug treatment and providing resources to treat people, especially young people, so as to get them off drugs and out of a drugs way of life, £5 million is a small sum. We are looking to the Government for a much clearer lead and a greater commitment to providing resources to show that the Government are prepared to take clear action.
We have heard something about the link between drugs and crime and the increased use of heroin. We think that there is some evidence, as does the Government's drugs tsar, of an increase in the use of heroin. I was struck by figures that the Government made available in a written answer to me. It appears from a Government strategy that 60 per cent. of all those arrested for offences—any offences—had been misusing drugs. Nearly 20 per cent. of them had been misusing heroin. Those are worrying statistics. We know that they are borne out by the experience of the police and of those who work in the Prison Service. We invite the Government to accept that drug abuse among young people is a significant factor in crime, especially in drug-addicted crime, where addicts steal to fuel their addiction. My hon. Friends have rightly referred to that.
Against the background of the link between drugs and crime, and given what we know about drugs and prison, we were surprised by what the Government announced yesterday about mandatory drug testing in prisons. We know that it is difficult to deal with drugs in prisons. However, the Minister admitted yesterday that mandatory drugs testing was showing success and reducing the


number of prisoners testing positive. Given that one policy is showing signs of success in a difficult area, we find it extremely strange that the Government would want to relax that policy in any way. That seems to defy common sense and logic.
Our worries were increased by the warm response from the hon. Member for Newport, West to the Government's relaxation of mandatory drugs testing. The hon. Gentleman is passionately in favour of the legalisation of cannabis, and he interpreted the Government's move as one in that direction. The hon. Gentleman is not alone. It appears that others have taken the same cue from the Government. We think that the Government were sending out a confused and mixed message. The Minister shakes her head, but that is the message that has gone out. We look to the Government to send out a clear message that all drug taking is wrong and that the Government will take a clear lead in the fight against drugs. Testing in prisons was valuable in respect of all drugs. It was detecting all drugs, including heroin, and not only cannabis. We are concerned that the testing has been relaxed.
As I said, we look to the Government for a clear lead and for commitment. We shall give constructive support to the Government. We know that there has been cross-party support in the past. At the same time, we are looking for clear action and a demonstration of commitment. Let us have an approach that goes beyond presentation and has a direct effect on the problem, which matches the huge concerns throughout the country. There are high expectations among millions of parents. That concern is shared by teachers and communities. There is a wish for the Government to give a clear lead in this difficult area and to show their commitment to tackling drugs. We expect nothing less.

The Minister of State, Home Office (Ms Joyce Quin): I congratulate the hon. Member for Worthing, West (Mr. Bottomley) on choosing this subject for debate and on the characteristically thoughtful way in which he introduced it. It is good to see the hon. Member for Congleton (Mrs. Winterton) on the Front Bench. I congratulate her warmly on her appointment. We welcomed her contribution and reaction to the statement made by my right hon. Friend the President of the Council and Leader of the House of Commons on the Government's drugs strategy.
There have been several contributions to the debate; obviously, they have been made by hon. Members who feel strongly about the issues, and they have raised some important points. I welcome the thrust of the contribution by the hon. Member for Hertsmere (Mr. Clappison). There were many points made during the debate with which I agree and some from Opposition Members and my hon. Friends with which I do not agree. I shall refer to those comments, particularly to some of the questions directed to me by the right hon. Member for Kensington and Chelsea (Mr. Clark).
The misuse of drugs, as hon. Members have recognised, raises a range of complicated and interlocking issues. In the short time available to me, I shall concentrate mainly on the threat posed to young people by drug misuse and on the crime generated by an addict's need to buy drugs. Both those themes came out strongly during the debate.
The hon. Member for Worthing, West talked about the need to look at changing attitudes and changing culture, and made some interesting points. He looked also at the effects of drug-related crime, the havoc that it can cause in some neighbourhoods and the individual heartbreak that it can cause to victims of such crimes.
Information on the level of drug misuse is hard to obtain, and I do not believe that any simple statement about whether the problem is getting better or worse is likely to do justice to the complex reality. However, clearer information is emerging from research both on the levels of drug misuse in the general population and on the extent and nature of drug-related crime. I believe that that improving research can help us draw up effective policies in response.
We are looking at a serious problem. On some measures it is stabilising and on others the trend remains alarming. For that reason, there can be no room for complacency, and there should not be any facile assumption that we are losing the war against drugs or that the cause is lost. I do not believe that; nor do the Government.
We know that young people are increasingly exposed to illegal drugs, as well as to alcohol and tobacco at even earlier ages. Some young people may be at particular risk because of other problems, perhaps to do with their family, housing, education or employment prospects. The activities of the Home Office drugs prevention initiative have included important work with young people. From that, we are finding that young people are concerned about drug-related risks and worried about the dangers. I believe that people, including young people, want reliable information about drugs. It is possible to reach those particularly at risk through existing services, but we need to stop as many youngsters as possible from experimenting with drugs. I believe that drug education can play an important role in that.
Recently, the Home Office drugs prevention initiative published an evaluation of one life skills drugs education programme. The objectives of the programme were to equip youngsters with the social competence necessary to cope with the pressure to begin using drugs, to enhance their self-awareness and self-esteem and increase their knowledge of the harmful consequences of substance misuse. The children from the programme were followed up four years after their initial involvement. The programme was piloted in three primary schools in Hackney in 1991–92 and the children were aged 13 to 14 when they were followed up in 1996.
The findings showed that those young people had a more negative attitude toward drugs than their contemporaries. They demonstrated a greater ability to resist peer pressure, which is an important part of the process, and were less likely than their contemporaries to have used legal or illegal drugs. Those encouraging findings provide important evidence on what works. They help to support the arguments that have been made for investing in drugs education and prevention for young people, which is part of our new drugs strategy.

Mr. Flynn: I believe that my hon. Friend is referring to Operation Charlie. May we consider bigger anti-drug propaganda and educational activities such as those which


have been run for many years against the use of cigarettes? Does my hon. Friend judge those to have been successful with young people?

Ms Quin: Obviously, there have been mixed results. It is possible to change attitudes and culture, and the evidence quoted this morning on drink driving was an interesting example. We need to learn lessons from such experience, to find the most effective way to deal with the problem. It is obviously important to look at ways of imparting information and connecting with young people in a relevant way. The hon. Member for Worthing, West referred to some of those approaches.
I shall look now at the link between drugs and crime. Until fairly recently, our perception of the extent and nature of drug-related crime was ill defined. Various estimates of the extent of such crime had been made, but Home Office research published last month is helping to clarify the picture.
That research involved interviewing and urine testing a range of people held in police custody in five locations—Sunderland, Nottingham, Cambridge, Hammersmith in London and Trafford in Manchester. It showed that the level of drug misuse among offenders was remarkably high compared with the general population. More than 61 per cent. of arrestees proved to have one or more prohibited drugs in their urine and 27 per cent. tested positive for two or more prohibited drugs. As a result of that research, we believe that referral systems at court level, as well as early intervention, will be particularly important in trying to get people off drugs at that stage.
I was interested to visit the "Get It While You Can" project in Brighton which involves going to see people who are being held in police custody and encouraging them to be referred to treatment services at that early stage. I believe that that early referral is extremely important in helping to tackle drug misuse and drug-related crime, which is so clearly revealed by the statistics.
The hon. Member for Hertsmere said that drug treatment and testing orders were an important part of the Government's proposals. That is true and we want to build on it. We will pilot that programme to see what lessons we can learn in the early months. I can tell the hon.

Gentleman clearly that we are determined to take that programme forward. We believe that it will be an important part of our strategy.
I shall now say something about drugs in prison, about which I know that there is great interest. Unfortunately, I have only a couple of minutes left.
I do not accept many of the comments made by the right hon. Member for Kensington and Chelsea, and I urge him to visit some prison establishments and to talk to prison staff and prison governors. The Prison Service is a disciplined service. It is given a framework in which it has to operate by the Government and the Director General of the Prison Service. That framework is built on a clear anti-drugs strategy, which was introduced by the Conservative party when in government. As the hon. Member for Hertsmere pointed out, that has had some success.
This is a considerable problem, so I shall certainly not gloss over it and say that there are no drugs in prisons or take a view that is artificially opposed to that expressed by the right hon. Member for Kensington and Chelsea. However, I am absolutely certain that the right hon. Gentleman's extravagant comments are simply not borne out by the facts.

Mr. Alan Clark: It is the director general.

Ms Quin: It is not the director general. The right hon. Gentleman does not seem to understand the difference between the Director General of the Prison Service and the chief inspector of prisons. Although the chief inspector of prisons has rightly drawn attention to problems in some prison establishments, he has not expressed himself in the way that the right hon. Gentleman did at Home Office Question Time on Monday, when he completely overstated the problem and tried to convince us that drugs were somehow encouraged in prisons. That is simply not the case. The results of mandatory drugs testing, as well as a panoply of measures on security, searches, testing and penalties, which we have added—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. We must now move on to the debate on plutonium disposition policy.

Plutonium

11 am

Mr. David Chaytor: I am grateful for the opportunity to open this debate on plutonium disposition and the growing problem of Britain's, and the world's, plutonium stockpiles.
The timing of the debate is particularly interesting in view of recent events at Dounreay and the treatment of uranium from Georgia and events in India during the past few days. The Indian Government have conducted surprising nuclear tests that raise questions about the future of the comprehensive test ban treaty and the possibility of completing the nuclear proliferation treaty.
The question of plutonium disposition is critical for the British economy, the environment and for the health and safety of everyone in the UK, not just those who live close to nuclear power stations. It is also critical for the Government's ability to work across Departments. I am pleased to see that my hon. Friend the Minister for Science, Energy and Industry is here to respond to the debate, but responsibility for this matter does not lie solely with the Department of Trade and Industry—it is a matter for several Government Departments, and I look to the Government to act corporately on it.
The issue also concerns the credibility of the Government's standing in the international community in terms of our ability to show leadership on difficult issues and to negotiate with Governments with different perspectives on matters that can ultimately be resolved only at an international level.
During the past nine months, there has been unprecedented interest in the future of nuclear policy in Britain. At the end of last year, two major reports were published on mixed oxide fuel: the first by the Organisation for Economic Co-operation and Development, the second by the alternative group of scientists who published the international MOX assessment report. Earlier this year, we had an annual report on sustainable development from the Government's panel, which drew attention to the pressing need for the Government to take a lead on the growing problem of radioactive waste. A report on the management of separated plutonium was then published by the Royal Society, which makes an important recommendation to which I shall return later.
Several Government Departments have decisions pending. In the DTI there is a review of energy policy generally; the Department of the Environment, Transport and the Regions is considering Sellafield discharge authorisations and the application to start commercial production at the Sellafield MOX plant; in the Foreign Office, negotiations are continuing on nuclear proliferation. The significance of those negotiations has been heightened by the events in India earlier this week.
This debate is not primarily about Dounreay and Georgian uranium, although I am sure hon. Members will wish to comment on that and on reprocessing at Dounreay in view of yesterday's decision on safety matters there. Nor is it primarily about what we should do as a result of the Indian nuclear tests, although yesterday's decision now opens the possibility of a further increase in the nuclear arms race in that part of the world. That relates directly to the global problem of stockpiles of plutonium.
Nor do I regard this debate as simply an opportunity to bash the nuclear industry, although there are grounds for criticising it over many years, not only because it has given misleading information about the cost of nuclear energy—ironically, that information was finally corrected by the accountants charged with preparing the electricity industry for privatisation—but because it has given misleading information about its links with the military. Indeed, it denied that there was any connection between civil production and military use of plutonium. Many attempts have been made to conceal serious safety incidents, ranging from the Windscale fire of 1956 to the problem with the Dounreay shaft, which was exposed recently.
The British nuclear industry has a phenomenal record of technological innovation. It has a high level of technical skill and is a world leader in nuclear technology. Moreover, it has the capacity to solve for this country and others the legacy of 40 years of mistakes in the nuclear industry and to provide the dream of safe nuclear power at some stage in the future—possibly.
This debate is really about how the Government should respond to the legacy of mistakes and learn the lessons of misguided policies, not only by the previous Government but by Governments before them. It is about taking an objective look at the options for dealing with the growing stockpiles. I was much encouraged, at a recent meeting organised by the GLOBE parliamentary group in the House, when the spokesman for the British Nuclear Industry Forum said that the reprocessing route, which has been the favoured route to date, was questionable. He said:
The jury is still out on reprocessing.
It was refreshing to hear such honesty from the industry and to see that it is now questioning and criticising the reprocessing route.
I shall give the facts about the scale of the problem of plutonium stockpiles. The global stockpile now amounts to some 1,240 tonnes—of one of the most dangerous substances on earth. It is predicted almost to double by 2010. The stockpile of global spent reactor fuel is now about 800 tonnes. That, too, is predicted almost to double by 2010. The United Kingdom stockpile of separated plutonium as a result of reprocessing is now 50 tonnes and is predicted almost to double by 2010, by which time Britain's share of the global stockpile of separated plutonium will be about two thirds. This is clearly an international problem of growing significance, but the stockpiles of separated plutonium are a particularly British problem.
Radiotoxicity is one aspect of the problem. Although it is now generally accepted that safety standards and modern techniques in nuclear installations provide far better safeguards for people working in them than was the case some years ago, that must be qualified by the continuing reports of incidents and the record, over a number of years, of accidents of some kind. However, discharges into the environment give continuing cause for concern. The radioactive content of liquid discharges is up to 1,000 times stronger than the content of discharges into the air; hence many people's strong opposition to the policy of discharges into the Irish sea and the recent call by environmental groups for a complete ban on such discharging. Everybody knows about the Sellafield radioactive pigeons, but radioactive shellfish probably give more serious cause for concern.
The second aspect of the problem is proliferation. Our minds have been focused by the events in India and, dare I say, the possible response by the Pakistan Government in the next few days. After many years of denials in this country that reactor grade plutonium could be used to manufacture nuclear weapons, several leading scientists have recently confirmed that it is possible to construct a crude nuclear device from separated plutonium. The current stockpile in the United Kingdom could be used to create several hundred such devices. It takes little imagination to understand the attractiveness of that option to terrorists, mercenaries and rogue regimes, especially in view of the political instability that prevails in many parts of the world.
The current solution to the problem is to accept the nuclear industry's argument that stockpiles will be dealt with by reprocessing. For more than 30 years, successive Governments have committed the British taxpayer to ever-increasing subsidy—explicit and concealed—to finance the great reprocessing experiment in the search for the virtuous circle of infinitely recyclable fuel.
The project was based on several assumptions: first, that the cold war would create endless demand for plutonium for nuclear weapons; secondly, that the availability of uranium would be severely restricted and its price therefore huge; thirdly, that fast-breeder reactors would be developed, endlessly to consume plutonium stockpiles; fourthly, that nuclear energy would eventually become dominant, if not supreme, in the national energy programme on the grounds of its cost and the availability of fuel supply; and, fifthly, that a solution would be found to the problem of storage of intermediate and high-level wastes. The preferred solution was a deep nuclear waste depository.
During the past 30 years, each assumption has been discredited and made obsolete by events. The cold war has ended and the United States of America and the former Soviet Union are reducing their stockpiles of nuclear weapons. Yesterday, President Clinton was one of the first to condemn India for reversing the move to disarmament internationally. New sources of uranium have been discovered and there are plentiful supplies at comparatively low cost. The United Kingdom withdrew support for our fast-breeder reactor programme some years ago and shortly after its general election last year, France announced the end of the Superphénix fast-breeder reactor.
Although nuclear power generates about a third of British electricity, it faces an uncertain future. At the beginning of their regime, the Thatcher Government promised a new nuclear power station every year. That programme was quickly abandoned. It is difficult to envisage a private investor proposing to build a nuclear power station, largely because of greater awareness of the effects and costs of decommissioning.
The final nail in the coffin was the refusal shortly before the general election last year by the right hon. Member for Suffolk, Coastal (Mr. Gummer), the former Secretary of State for the Environment, of Nirex's application for a deep depository at Sellafield. The implications are interesting, because it will be extremely difficult, if not impossible, for British Nuclear Fuels to pursue the practice of substitution, whereby it returns a radiologically equivalent amount of high-level waste to the foreign generator, thus reducing the cost of reprocessing by saving the transport cost of returning the

much bulkier intermediate or low-level waste. The fact that the cost of transporting intermediate-level waste is about 80 per cent. of the cost of sending the spent fuel to the United Kingdom has major implications for the cost of reprocessing.
The tragedy is that all that was widely understood before the previous Government approved the construction of the thermal oxide reprocessing plant at Sellafield, which firmly committed the United Kingdom to at least a decade of reprocessing, and continued the great British tradition of pursuing grand projects long after the original purpose has been left behind by events. Hon. Members may have favourite examples of such projects.
It is important to mention the role of mixed oxide fuel in the reprocessing industry and, in particular, BNFL's intention to establish a commercial production facility for MOX at Sellafield and develop what would essentially be an international trade in plutonium. Hon. Members should consider the impact of an international free market in plutonium following the events in India earlier this week. Do we really think that the way forward to global security is to allow India, Pakistan, North Korea, Iran, Iraq and Israel to benefit from a free market in plutonium? I think not.
For the nuclear reprocessing industry, MOX is the final link in the chain, because it creates a new fuel from separated plutonium and uranium that can be used in certain reactors. Significantly, MOX will not be used in British nuclear reactors. A spokesman for British Energy said recently:
It would be thoroughly uneconomic for us to convert our AGR"—
advanced gas-cooled reactor—
to use the new MOX fuel. It is not just a case of cost either. It would require a lot of extra shielding and protection for our workers. It would be difficult, if not impossible, for us to use MOX fuel.
Consequently, BNFL considers the future of MOX to be in international contracts. If the MOX plant is approved, there will be a dramatic escalation of the quantity of spent nuclear fuel being flown and transported by train from all parts of the globe for reprocessing and remanufacture into MOX at Sellafield. We need only consider the intense opposition in recent years, especially in Germany, to appreciate how public opinion might be affected by an escalation in Britain's role in taking in the world's radioactive waste.
Apart from the dubious economics of such an international trade in plutonium, the increased potential for nuclear accidents caused by spent fuel making more journeys over greater distances and the threat of nuclear terrorism, there is the question of the impact of MOX on the plutonium stockpile and the stockpile of other intermediate and high-level nuclear wastes. Although the manufacture of MOX consumes some of the stockpile, it creates more plutonium for recycling and even more waste, which we do not have the faintest idea how to deal with. Significantly, the December 1997 OECD report on MOX did not refer to the problem of intermediate and high-level waste created by MOX production.
There is an alternative. For a number of years, the consensus among those who are primarily concerned about protecting the environment against radioactive discharges and nuclear accidents and about reducing the risk of nuclear terrorism and proliferation has been to


abandon reprocessing and to adopt a policy of dry storage. Dry storage of spent fuel can be either by vitrification in glass blocks or by ceramic immobilisation. Either way, the material can be stored indefinitely, in a geological depository, or temporarily, until technology develops to perfect other safe and environmentally harmless ways of disposing of spent fuel.
It is conceivable that the fast breeder dream will one day be realised. Only Japan is continuing research on a fast breeder, but we must accept that its attempts may be successful. Reactors may be developed that do not use plutonium. The dry storage option would buy time for future research to prove itself. No one pretends that that option is cheap or simple, but it is generally accepted that it is cheaper and safer than reprocessing and avoids the risks of transporting material over long distances and of proliferation and theft.
We are left with a legacy to manage for hundreds, if not thousands, of years. The Royal Society report on the management of separated plutonium states:
The surest anti-proliferation measure is to stop reprocessing spent fuel and to reduce the quantity of separated plutonium in store.
Current Government policy is to delegate responsibility for the decision about plutonium stockpiles to the commercial judgment of the owners of the spent fuel. In view of the changing circumstances in recent years, that is no longer a sensible policy. I do not believe that the enormous implications for everyone of the growing plutonium stockpiles can be left solely in the hands of the operators. Plutonium is no respecter of international borders. The size and scale of the problem, its international dimension, the potential impact on the environment and on people's health and safety and the impact across the globe if we get it wrong combine to argue powerfully that the matter is for the Government as a whole, and that all Governments must take responsibility.
I therefore propose five steps towards a new approach to the problem of plutonium stockpiles. I accept that few of these fall within the remit of my hon. Friend the Minister for Science, Energy and Industry, which highlights the fact that the issue crosses the whole of the Government, but I should be grateful if he could comment generally on them in his response.
First, it is important that the Environment Agency completes the review, for which the previous Government asked, into the operation of Sellafield and THORP before continuing work on making recommendations on the application for commercial production of MOX at Sellafield. Secondly, although the Environment Agency has responsibility for considering the MOX application and making a recommendation, that must ultimately be a political decision, so I hope that the matter will be called in by my right hon. Friend the Secretary of State for the Environment, Transport and the Regions.
Thirdly, I endorse the Royal Society's call for a national inquiry into plutonium disposition. Its report of January this year states:
The society urges the Government to commission a comprehensive review by independent experts of the options outlined above, covering technical, economic, environmental and security aspects, energy policy issues and taking account of public acceptability and of the opportunity costs of each option.

I hope that the Government will respond positively to that recommendation.
Fourthly, to illustrate that this is not a matter only for the United Kingdom or any individual state, the Government have an opportunity to take an international lead, as we did in the negotiations on climate change in Kyoto, by convening an international conference to agree an international strategy for dealing with plutonium stockpiles. That conference should include such issues as establishing an international register of fissile material, the potential for placing all nuclear establishments under an agreed international safeguard regime and a review of the potential conflict of interest between some of the functions of the International Atomic Energy Agency.
Finally, the Government must do everything possible to press ahead with international negotiations on the nuclear non-proliferation treaty and to push for an international fissile cut-off treaty, which has already been agreed in principle by Governments.
I want my Government to demonstrate that they can respond, across Departments and reconciling their different perspectives, to the changed circumstances of the post cold war period and to the new environmental agenda. Our commitment to putting the environment at the heart of government is central to our future policy on reprocessing and plutonium stockpiles. It would be an enormous disappointment to many millions of people if the new Labour Government simply continued with the old nuclear policies.

Sir Robert Smith: I congratulate the hon. Member for Bury, North (Mr. Chaytor) on securing the debate and on his excellent outline of the issues that should be addressed both in our debate and by the Minister in his reply. I recognise that the Minister will have to speak with many tongues for the many Departments involved in the debate.
We heard news this week of the Foreign Office view on this country's role in damping down a resurgence of interest in nuclear weaponry. Regrettably, we have reached a point in history where, although the cold war as a driving force behind proliferation is ending and states are reaching a point where they can negotiate on weapons reduction and non-proliferation, the nuclear problem is bubbling up in another area and as a result of other motivations. It would be sad if, while our Foreign Office is trying to play that damping role, in another guise we were providing the materials—raw materials that can be processed, or at least the precursors—and the wherewithal to enable countries to expand their weaponry. A reassurance from the Minister that the Foreign Office is in the picture and part of the loop would be welcome.
In debates such as this, it is difficult to avoid topicality, but the public will be concerned that a JCB can bring a nuclear reprocessing plant to a halt. That is clearly not the modern level of operating safety that people want. Explanations will come in the fulness of time, but such stories do not help to instil confidence that we have adopted the right long-term strategy or to reassure us that the matter is under control.
The role of the Department of the Environment, Transport and the Regions is important. I listened to the five steps outlined by the hon. Member for Bury, North, who spoke of the need to bring a political decision to bear


on the MOX issue. With my knowledge of planning and environmental law, I do not know whether the fact of the decision being called in by the Secretary of State makes it a purely political decision, because Ministers are constrained by judicial review in the courts. It may be that, if there is to be a political element, Parliament will have to be involved and review the legal framework surrounding the decision and the way in which it can be taken.

Mr. Tam Dalyell: The hon. Gentleman stated that Dounreay was brought to a halt, but that is not quite the situation, is it?

Sir Robert Smith: I think I said that the reprocessing part of Dounreay was halted, and that was the situation. The hon. Gentleman is right: when we analyse the details and the science we may find that the incident was not as dramatic as the headlines suggested, but the reality is that such events generate public concern. When dealing with complex nuclear material in an environment where there is at least the potential for something to go seriously wrong, one would expect higher levels of safety management to ensure that we do not get that close to having to shut down parts of the operation.
There is major environmental concern about where we go in the long term. The dry storage and continued research option has the greatest potential to produce, in the long term, a solution that protects the next generation, so it is worrying that further reprocessing contracts might be issued. We do not seem to understand that, although in its time there may have been a logic to reprocessing—some say that even in its time it was not logical—movements in the price of materials and developments in the nuclear industry tend to suggest that the time for that process has passed. It is time for a review, and time for the Government to make clear what role they envisage for the reprocessing industry.
Taking an international lead is important. If we show that we can take a decision on this matter, we as a country can play a major role in international negotiations on the future uses of plutonium. It is not clear that having a new Government has brought about any great change in strategy, so it might be interesting were the Government to step back and ask whether they should review the whole subject, bring together all the Departments and consider carefully whether we are trapped in inertia. Are we still in charge? Are we taking a lead? Are we driving the agenda in the direction we want to go? What future role do we envisage for plutonium?
It would be interesting if the Minister could outline his understanding of the current disposition of plutonium. How much is in military hardware? How much is sitting awaiting reprocessing? How much has been set aside for medical uses, such as pacemaker batteries? What percentage of plutonium use do other uses represent? It seems that the biggest use is for fuel and recycling. We do not want to be sidetracked into how we could power pacemakers on the back of the nuclear industry; that is a useful by-product, but it should not be the driving force.
We want to feel that the Government want to take charge of the situation, will not allow it to drift, and will not allow policy momentum to mean that we miss an opportunity. Above all, we do not want this country to

play a part, by default, in encouraging nuclear proliferation and undermining the hard work that has gone into driving away the threat posed by nuclear weapons.

Mrs. Ann Cryer: I congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on his perception and foresight in raising an important issue. I also thank him for his information-packed speech: I, for one, have learnt a great deal.
When my hon. Friend applied for the debate, he could not have known how relevant it would be, following events in India earlier this week. I have received a telephone message saying that India has, unfortunately, exploded two further nuclear devices, presumably overnight. The testing of nuclear devices in India is a perfect example, were one needed, of the honors that can ensue when there are inadequate controls on nuclear materials—such as plutonium—and their associated technologies. The House should note that the principal supplier of the material and technology that underpin the Indian nuclear programme was another Commonwealth country—Canada. There was also ample help from other countries, such as the United States, which supplied the uranium.
These are extremely good arguments in favour of an international, universally applied and agreed fissile material control and disposition policy. They demonstrate the need to move away from the current fragmented approach, involving three separate Government Departments, towards a single, over-arching British fissile material control and disposition policy. I hope that my hon. Friend the Minister will agree, will take seriously the views that hon. Members express today, and will work towards implementing such a policy.
I shall write to Pakistan's ambassador to urge restraint. If Pakistan follows its neighbour's extremely unfortunate example, the entire population of the sub-continent will be the losers. The question of Kashmir will remain unresolved, along with various other disagreements between India and Pakistan. These two countries are among the poorest in the world. Their people need basic education and health care, adequate shelter, pure water supplies and a decent diet; they do not need the means to kill each other on a massive scale. I trust that these sentiments will be supported by my Pakistani-Kashmiri constituents, and that those constituents will press their Government to stay out of the nonsensical arms race.
It would be helpful if our Government adopted a do-as-we-do approach to the international nuclear weapons non-proliferation treaty, instead of their present do-as-we-say policy. Perhaps our representations to India would then carry much more weight.

Ms Roseanna Cunningham: I congratulate the hon. Member for Bury, North (Mr. Chaytor) on obtaining an extremely important debate, even if he did beat me in the great Adjournment debate lottery.
As may be expected, I shall refer to events at Dounreay over the past few weeks. First, however, let me quote from the Government's policy on nuclear reprocessing, which, as far as I can see, may have been cobbled together without debate late last year. Hidden away on the


Department of Trade and Industry internet site, under the heading "UK Civil Nuclear Policy including Plutonium", it states:
The UK Government believes that the question of whether to reprocess (and if so when), or to seek alternative spent fuel management options should be a matter for the commercial judgement of the owners of the spent fuel, subject to meeting the necessary regulatory requirements.

The Minister for Science, Energy and Industry (Mr. John Battle): The hon. Lady will, I think, accept that that information was placed in the Library, and not, as she said, hidden away on the internet—which is in the public domain in any case. I hardly think that she can claim secrecy.

Ms Cunningham: I am glad to hear that. We obtained it from the internet; perhaps we are more wised up than others on new information technology.

Mr. Chaytor: Let me support the Minister by saying that the statement that has been quoted was contained in an answer to a parliamentary question towards the end of January. There was no concealment.

Ms Cunningham: Indeed.
Perhaps we can move on to focus on the words of my quotation. As I was about to say before people began to leap to their feet, the policy has been reiterated in a number of recent written answers. We appear to have a laissez-faire policy for what is possibly the most dangerous of global industries. That is a frightening thought, particularly when we think of the extraordinary catalogue of incompetence and cover-up at Dounreay, which is one of the owners of spent fuel referred to in the Government's policy statements.
Spent fuel management is left to companies' commercial judgment, not their environmental judgment, or a judgment based on thoughts of international security. The economic viability of the nuclear industry would fill an entire debate, but after the Government's high rhetoric over the past few weeks about doing our bit for the world's problems, their policy shows little interest in doing anything to diminish the problem of nuclear proliferation.
The United States Government, who conducted a thorough and open debate into plutonium disposition for several years before they took substantial steps to address the issue, regard Dounreay as a proliferation threat. They refuse to allow their spent fuel to be processed there, saying that
it would not be possible to ensure compliance with the United States' nuclear weapons non-proliferation policy objectives.
My source for that is the United States Department of Energy's Safe Energy Journal No. 108, January to March 1996. Meanwhile, an unidentified spokesman from Dounreay was quoted, in The Scotsman on 23 April, as saying:
If our customers want bomb-grade material, they can have it.
That is not terribly reassuring. Nor is it terribly surprising, when the Government are asking only for the nuclear industry to apply its commercial judgment.
It is slightly comforting to know that no plants at Dounreay are currently operational. It was announced yesterday that, in the light of events last Thursday, which led to both a loss of power and the failure of the back-up electricity supply, the nuclear installation inspectorate has directed the United Kingdom Atomic Energy Authority to ensure that all processing activities in the fuel cycle area remain shut down until a safety case can be made that gains the consent of the Health and Safety Executive.
The whole issue is generating enormous debate in Scotland. Today, there is an entire page of analysis in The Scotsman, which is, in part, indicative of the tone of the response that is emerging. Let me quote two sections from Christopher Cairns's commentary. The first states:
A nuclear power plant's failsafe systems are the last line of defence against cataclysmic disaster on the Chernobyl scale for use in only the most extreme of emergencies. Is it at all comforting that, as far as Dounreay is concerned, that includes the laying of a telephone line?
He says, secondly:
This, remember, is the safe haven for the uranium which came out of Georgia last month. Of course, a war-torn corner of the former Soviet Union is not the place to keep bomb grade material. But a reprocessing and storage facility which is incapable of even guaranteeing its own power supply must surely run a pretty close second.
That is the tenor of coverage in Scotland of what is happening at Dounreay, and the Government ignore it at their peril.
I want assurances from the Minister that the safety case will involve more than just electronics. The whole condition of the fuel cycle area must be looked at to avoid any more unforeseen accidents.
In its latest quarterly report, the nuclear installations inspectorate referred to an unpublished report of its own identifying the deficiencies in the fuel cycle area. The NII is willing to release the document, but until now UKAEA has blocked its release. In the light of recent events, I would ask the Minister to have that report placed in the House Library, as it is clearly a matter for public concern. I believe that the NII has never served such a wholesale direction on any installation since its inception, which serves to highlight the seriousness of the situation at Dounreay.
It is also worth noting that the D1203 plant, destined to process parts of the Georgia waste into targets for medical isotopes, and the only plant still operational at this time last week, is now closed until further notice. The remaining plants are old and falling to bits. UKAEA has put in an application for funding from the DTI to upgrade plant D1206, a reprocessing plant that would churn out even more plutonium. When can we expect a statement from the DTI about that? What criteria will be used to arrive at a decision on D1206?
To assist the Minister with his decision, I should like to give him a resumé of some of Dounreay's recent achievements. In 1977, a waste shaft filled with an explosive mixture of waste and chemicals exploded, spraying radioactive material into the surrounding environment. In January this year, UKAEA's chief constable, Tony Pointer, resigned, apparently over security inadequacies at the plant. In March, a mock evacuation was so unsatisfactory that the Nil demanded a re-run. Last week, the Scottish Environment Protection Agency served a notice on UKAEA for grossly underestimating its radioactive discharges. A worker was


found last week to have been subjected to more than the annual allowable dosage of plutonium radiation. Then there was last Thursday night's complete failure, which could have had disastrous consequences had any of the reprocessing plants still been in an operational state.
There should be a full inquiry into all aspects of management and operations at Dounreay, not more funding for plant D1206. I believe that the findings would show that all its plants should be retired before there is any more opportunity for error. Our continued opposition to the operations at Dounreay is founded not only on the evidence of its incompetence and state of disrepair but on the fact that it exists to reprocess spent fuel—

Mr. Dalyell: If all this represents the whole story, why has Dounreay been awarded its fifth ROSPA gold medal for safety?

Ms Cunningham: That is an extremely good question to which I do not know the answer. On the face of it, Dounreay should not have been given any commendation; the vast majority of the public in Scotland would be astonished to discover that it had been commended.
The Scottish National party does not believe that nuclear waste should be reprocessed. Reprocessing increases stockpiles of plutonium and highly enriched uranium, and spreads them around the world, where they are increasingly vulnerable to theft and misuse. The hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) spoke of the dangers of Departments promoting policies at variance with each other. He might be interested to know that Dounreay has in the past exported highly enriched uranium to India—no doubt one of the UK's contributions to non-proliferation.
Contrary to what the hon. Member for Cunninghame, North (Mr. Wilson) may like to imply in the press, the SNP believes that each country is responsible for storing its own waste—and that includes Scotland. In 1992, Scottish Nuclear planned its own dry storage facility at Torness. The Government stalled the decision on the facility, but Scottish Nuclear did not hang about—with the result that the waste was and is transported to Sellafield. The SNP made no objection in 1992 to the proposal for the facility at Torness, because it was in keeping with our policy. We do not promote NIMBYism; we simply believe that what countries make in their own back yards they should keep in their own back yards—hardly an unreasonable line to take.
We should like above-ground dry storage facilities at each of the Scottish sites where we can responsibly store spent fuel and put an end to the cycle of reprocessing and proliferation.

Mr. David Drew: Will the hon. Lady give way?

Ms Cunningham: I need to press on; sorry.
With on-site dry storage, nuclear material will not have to be transported around the United Kingdom or the world, thereby reducing the risks of accident, theft and terrorist attack. The material would be retrievable and easily monitored—an aspect too often overlooked in discussions about non-proliferation.
In order to know whether plutonium is missing we need to know what amounts there were in the first place. There are further opportunities for the UK's nuclear industry to

play its part in non-proliferation. Both BNFL and UKAEA have the technology to immobilise separated plutonium—to embed it in glass logs or ceramic pellets in such a way as to make it easy and convenient to store and harder to use for making weapons. Consideration should also be given to adapting existing technologies to the good uses to which they have already been put by the USA—methods described by BNFL as the optimum for converting high-level waste into a solid form that can be stored safely, conveniently and economically. This information comes from BNFL's briefing note "The Vitrification Plant", to be found on its website.
Immobilisation is considered by the United States to fulfil its spent fuel standard, which stipulates that, whatever is done with its stockpiles of separated plutonium, it must be rendered as inaccessible as it is when locked into a spent fuel rod. At the same time, President Clinton has made a commitment to downblending the nuclear material retrieved from former warheads, and placing it in secure storage. It is estimated that there are between 1,600 and 2,000 kg of plutonium in the UK extracted from former warheads. Where is that plutonium; is the Minister prepared to commit himself to retiring it?
It would appear that the SNP currently has a clearer policy on the disposition of plutonium than do the Government. We want a halt to reprocessing, on-site dry storage, the adoption of the spent fuel standard, and consideration of immobilisation technologies.
The lack of debate on the subject to date has been shameful. The secretive, underhand way in which the Government brought in the Georgia waste was illustrative of the Government's attitude, making a mockery of their manifesto promise of
a new commitment on transparency by the nuclear weapons states".
If this was transparency I dread to think what is going on in secret—and this is an industry bedevilled by secrecy. We sometimes find out about failures only years after they occur, but we are always reassured that everything is safe and secure—except for what happened last week, last month, or 10 or 20 years ago.
This is not good enough: it leads to a breakdown in public confidence. The SNP is wholly willing for Scotland to play a responsible part in international efforts towards non-proliferation. I want to put paid to some of the spurious accusations of recent weeks. Our belief is that nuclear proliferation gives rise to serious concern that must be met with international determination. The Government must be prepared to conduct a thorough debate and an open consultation, along with their international partners. Through that process I would hope to reach a far more principled stance than the current mix of arm's-length policy and hollow rhetoric allows.

Mr. Tam Dalyell: The other side of the coin is this: if we do not have nuclear energy, what will we do about global warming and its related problems?
Dounreay is well equipped to recover plutonium and highly-enriched uranium from fuel elements and residues. It provides a safe and secure area for carrying out such work. The security standards have been confirmed as meeting the requirements of the DTI's independent security watchdog, the Department of Civil Nuclear


Security. The full complement of police is in place, and a new security fence costing more than £1 million was installed in 1997.
Dounreay's discharges from carrying out reprocessing work are low. The dose to the most exposed group of the public is only 1 per cent. of that received from natural background radiation. As I have pointed out, Dounreay has just been awarded its fifth ROSPA gold medal—and ROSPA is run by pretty competent people.
Reprocessing produces a well-characterised waste form that is stable and suitable for safe long-term storage or disposal. Dounreay has long experience of safe transport of plutonium to Sellafield. The recovery of the highly enriched uranium at Dounreay is beneficial because it can be used either directly or indirectly in the production of medical isotopes. If the Minister thinks that any of those facts are wrong, he will no doubt tell me. I am sure that he has some explanation as to what actually happened after the accidents involving the bulldozer.
There are others who want to speak, so I shall briefly say that, in preparation for this debate, I went to my old friend John Dunster, who authorised me to quote him. He says:
I was glad to see your support for the processing by Dounreay of the enriched uranium from Eastern Europe.
There are problems with enriched uranium and plutonium. I thought that my hon. Friend the Member for Bury, North (Mr. Chaytor) made a constructive speech: the vitrification avenue may be as good, if not better. I welcomed the whole tone of his introduction, because, although I did not agree with him, it was highly constructive and measured. I congratulate him on the style and the way in which he put the argument.

Dr. Lynne Jones: I note that my hon. Friend began his speech by expressing concern that we needed to continue with nuclear power, but does he accept that mixed oxide fuel is not seen as a potential fuel in this country, and that the concern in this debate is about the massive stockpiles of plutonium that are being developed as a result of MOX and other reprocessed fuels, for which this country has absolutely no use?

Mr. Dalyell: The brief answer is that the International Atomic Energy Agency has calculated that, through the use of MOX fuel, plutonium stockpiles can be held steady and then reduced in the first 10 years of the next century.
May I make the points that John Dunster made:
As a former Deputy Director general of the Health and Safety Executive and its Director of Nuclear Safety, I am sure that the requirements of Her Majesty's Nuclear Installations Inspectorate and the technical competence of the Dounreay management will together provide an appropriate level of safety for processing this material.
I am not convinced by the argument that we should not accept overseas nuclear material for reprocessing, provided that we have the capacity to deal with it safely. Dealing with other people's spent fuel, even without the return to the country of origin of the associated radioactive waste, is no different from the export of manufactured goods. Any such exportation involves us in carrying the risks and the environmental costs of manufacture for the gain of foreign currency. I see nothing wrong in encouraging exports. If we can provide an expert service to other parts of the World at the same time, so much the better. In the case of the enriched uranium, the processing risks are small and the benefits considerable. We have a moral duty to go ahead.

Sir Robert Smith: I think that many people accepted in the Georgian instance that return and the change of Government policy may have been a necessary and sensible move in the international circumstances, but does the hon. Gentleman not feel that, had the Government come to the House and had a debate, not on the specifics, but on the principle that, in cases where there was an unstable regime, this country would be willing to change its policy, public acceptance and the debate would have been totally different? Instead, the whole issue came out through a leak, and the Government claimed that they could not have a debate even on the principle of the issue because of security reasons. However, there would have been no security implications in debating the principle, if not the details.

Mr. Dalyell: I am an old-fashioned person who thinks that it is the job of Members of Parliament to lead the public debate and to try to inform the public. Personally, I am proud of what Scotland, Britain and the British nuclear industry are able to do in offering expertise to the world to overcome a real problem. It would be selfish of me to speak at any greater length. I simply ask the Minister: is he not also proud of the British nuclear industry?

Mr. David Drew: I had come to the Chamber with the intention, not of speaking, but of listening and possibly intervening. However, I should like to make a couple of points to add to the analysis of my hon. Friend the Member for Bury, North (Mr. Chaytor), who, in an interesting and analytical explanation of where we are in relation to plutonium disposition, made many points that I share, if not wholly agree with.
We must understand that there is the factor of the basic integrity of the nuclear industry. This is an interesting industry because it is split so many different ways. It transcends the public and private sectors and military and civilian purposes and it is commercially driven. At the same time, it has international obligations and has to meet basic needs in terms of the general purpose of the world's population.
Whether we like it or not, there is a proliferation of plutonium, and we have to do something with that, whether it is through the civilian route or the nuclear industry. There is also the proliferation of nuclear weapons. Various people have spoken about the problems in India, Pakistan and elsewhere. We must hope and pray for non-proliferation treaties, but realpolitik tells us that, at the moment, we have to remove that plutonium in whatever ways we can.
The nuclear industry has a purpose, a role in the future of the world. We cannot disinvent it. It is there. It is functioning. Many Members here today believe that we will have an energy shortfall in 40 or 50 years' time. Even if the most ambitious ideas of those who support—as I do—the alternative, the reusable sources, are put into practice, we still almost certainly have an enormous shortfall in energy, particularly as securing more energy is the only way in which the third world can develop. Many countries are energy deficient and must look for ways in which to reach developed status. They will need to be able to share in that.
I have a problem with all the allegations and emotive attacks on the nuclear industry. I share some of the concerns about the secrecy and lack of transparency in the


way in which the nuclear industry has tended to operate both in this country and the wider world. What concerns me is that, unless we face up to the reality of the situation, we will lose the technological know-how. We will face a world where there are no people to solve the problems that we have to solve because they will not go away.
This country was particularly well known as the leading advocate of nuclear industry. Many of our brightest brains and the people who slaved hard to come up with answers are either working in other parts of the world or leaving the industry and not being replaced. My only plea is that we do not lose the advantages that we have. We have to face up to our responsibilities and to look at what is possible at the moment. I strongly believe that, whether we like it or not, reprocessing is the best way in which to remove plutonium for the time being. We have examined how to store it, but that is neither safe nor necessarily the better alternative.
There may be ways in which, by keeping our integrity in this industry, we can find better solutions. Science in different parts of world is trying to come up with ways to find the better alternative in dealing with the problems of plutonium. As a non-scientist, in upholding faith in science, I ask hon. Members and the Minister to have a little faith in the nuclear industry and to recognise that it is about not only commercial obligation but the basic requirement of mankind to find both energy and a safe way of disposing of plutonium.

Mr. Tim Boswell: The hon. Member for Bury, North (Mr. Chaytor) performed a considerable service to the House by raising these important issues, and by the general tone in which he did so—a tone which has been followed, with perhaps one exception, by subsequent speakers—given the great public concern and emotion about these matters.
Plutonium is a highly toxic material in certain applications, although its nature, which emphasises radiation through the emission of alpha particles, means that it is less penetrative than some nuclear fissile materials. In certain cases, it can be rendered relatively innocuous in use. However, on the applications side, apart from its potential use in nuclear weapons, it is a nasty substance that needs proper respect, as do many other substances that are used variously in industrial processes, from chlorine to arsenic. Plutonium is not unique in being toxic; it is perhaps unique in potentially being of very high value. It has been said that, per kilogram, it is perhaps the most valuable material in the world. The stockpile is a considerable asset in terms of its capacity for use, and not simply for nuclear fissile or nuclear warfare activities.
The concern that is rightly expressed in public debate about nuclear issues, as opposed to other industrial processes, perhaps goes further than it should. I think that that has much to do with the fact that nuclear radiation cannot be perceived, visually or by means of any of our senses. Inevitably, public debate is mediated by experts who may or may not have vested interests. Radiation has to be measured by instruments and we must be reassured by scientists. That is not always a happy situation.
Although the nuclear industry generally has a good safety record worldwide, and certainly in the United Kingdom, there have been exceptions, of which the

clearest example is Chernobyl. I had some experience of that when I worked in the Ministry of Agriculture, Fisheries and Food. Twelve years ago almost to the day, we had to put the sheep population of parts of the United Kingdom under control. It is a sobering thought that some of those sheep are still under control because of the very high safeguards that we needed to impose, rightly, to reassure the public. Things can go wrong but mercifully they do not generally go wrong, and they certainly have not gone wrong systematically in relation to the United Kingdom's stockpile of plutonium.
This is a timely debate because, as the hon. Member for Bury, North said, the Royal Society has rightly expressed its concerns and its wish that the Government should consider the long-term disposition of the United Kingdom's growing stockpile. That stockpile is owned by a number of operators, and reflects both the retirement of nuclear weapons and, more particularly, the growing output of commercial reactors. I agree with the Government-I am sure that they will confirm that this is their position—that there is no immediate need for a decision. It would be wrong to rush into one. It needs proper consideration. While the material is being held as it is, I am broadly satisfied about its safety, but I would like the Minister to confirm the position.
The hon. Member for Perth (Ms Cunningham) and other hon. Members mentioned that concern has been heightened by recent events. The acceptance of the Georgian high-grade uranium material for reprocessing at Dounreay on a one-way ticket has inevitably reignited concerns about the security of nuclear installations generally. They were highlighted in recent days by the apparent failure of power supplies at the plant. I shall return to that later, because the interpretation of safety data and precautionary action is important.
There have also been disturbing revelations about apparent leakages and high levels of ambient radiation from French trains carrying material for reprocessing. That has not been mentioned today. It is right that the House should be vigilant on behalf of the public, and of the world environment, about unplanned discharges. Our job is to ask Ministers the questions that Ministers should be regularly asking their officials. I hope that they are. In particular, we must ask whether they continue to be satisfied that security at our nuclear installations is adequate, that messages are passed to other nuclear operators outwith the United Kingdom about their security and, in particular, that Sellafield is now doing what it should, given its stockpile.

Dr. Lynne Jones: Does the hon. Gentleman agree that there should be accountability regarding the location of material such as plutonium in a form that it is possible to convert into weaponry? Even the smallest amount of material should be accounted for. Is he not concerned that that will be difficult if there is reprocessing and dispersal of plutonium across the world?

Mr. Boswell: I am grateful for that question. The effect of reprocessing on the whole complex of high-level waste is to reduce and concentrate it. That creates plutonium, which has to be secured. The alternative may be to allow proliferation, or expansion, of the total amount of high-level waste kept in dry storage unprocessed. That is a difficult judgment. I had no part in it, but the previous Government had to consider it in respect of THORP, the


thermal oxide reprocessing plant. Of course what is done with plutonium, and the extent to which there is accountability, are important. It is for the Minister to say how precisely he can account for it and whether there are any unaccountable losses that concern him. He can assure us that it will not happen in future. It is for the operators, who carry out the process primarily on a commercial basis, to decide whether something is economic and appropriate, and for those who license and control their activities to ensure that the matter is properly accounted for; it is right to separate the capacities.
As the hon. Member for Bury, North said, plutonium waste could possibly be converted into fissile material. Although it is not the material of choice, it is important that we view it on its merits as a potentially fissile material, and account for it appropriately. That needs to be got right. However, as the hon. Member for Linlithgow (Mr. Dalyell) did in relation to Dounreay, it is important to put on record the safety achievements of Sellafield.
That is an important point in the argument about industrial activities involving various scientific applications, whether in the nuclear industry or in other industries such as genetic engineering. We must consider the alternative. We must also consider the built-in propensity, when we measure and impose safeguards and insist on the highest possible standard, to expose more items which in a sense—I speak not as Sir Humphrey but as a concerned member of the public—reveal the robustness of the safety system. The inspectorate's decision to shut Dounreay shows that it was not satisfied with standards, not that something was inherently wrong with the plant when it was in full operation. That is relevant to Sellafield.
British Nuclear Fuels plc can declare a secular decline in the accident rate, which affects the overall housekeeping of the plant. More precisely, there has been a systematic and dramatic lowering of the discharge consent levels, whether involving ambient discharge or discharge into the sea, reflecting the fact that society rightly wants higher standards and will, I hope, enforce them. If they are occasionally departed from, that shows that the system is broadly working, not that it is failing.
It is also important to record that BNFL is the major employer in Cumbria. Some 8,000 are employed at THORP alone. It has set a new standard in being open with the public. It has created a visitor centre, not to tell people just what they need to hear, but to give them a chance to see what is going on. I have not visited it yet, but I hope to do so in due course. That readiness to open up suggests not an attempt to cover up, as some people suggest, but a readiness to take the public into the confidence of both the Government in relation to regulation and the operators in relation to their activities on the important overall issues.
We cannot expect the Government to say things that bear directly on security, but the more sunlight that can be let in, the better. Then the argument for confidence and concern about matters that we cannot measure ourselves—we do not know what is going on without the aid of instruments and interpretation—can be turned round. As the hon. Member for Stroud (Mr. Drew) rightly said, the Kyoto requirements may well in due course lead

to some reappraisal of the balance of energy sources. That will undoubtedly be one of the Government's review of wider energy issues.
In his response to this important and timely debate, I should like the Minister to comment on several aspects relating more directly to its specific subject—the disposition of plutonium. As other hon. Members have said, the debate goes wider than the remit of the Minister's Department. It involves environmental concerns and Foreign and Commonwealth Office diplomatic matters. What is the latest position of the United States and Russia in respect of their ex-weapons plutonium? Where are we with that? What is likely to happen in terms of the preferred options of either incorporation through vitrification and deep disposal or otherwise, or the use of mixed oxide fuel? The United States and Russia are obviously major sources of ex-weapons plutonium, and that is not stuff that should be readily available to anyone. It needs to be turned into something else and made safer.
I have said that I do not want to press the Minister for an immediate decision on a change in policy—it is right that the matter should be considered over time—but how long does he feel, in the light of the Royal Society's comments, that we can continue to accumulate the United Kingdom stockpile of plutonium before a decision is forced on us? Is there a physical constraint? Clearly there is a security consideration. Will he give us a flavour of his feeling about that? Has he appraised mixed oxide fuel for United Kingdom conditions? There is a strong technical indication against its use here, and any that has been produced at Sellafield has been exported, but it would be helpful if he would say something about that.
Almost the last decision of my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) as Secretary of State for the Environment was his valedictory and correct decision to discontinue the possibility of deep storage at Sellafield. Is there still an interest in the country in deep disposal elsewhere? How is the Minister considering the various alternative disposal options for the United Kingdom's waste, which is strictly the subject of our discussion today?
In reaching his decisions in due course, what balance will the Minister strike between financial cost, environmental considerations and security considerations—nailing this stuff down for the future? Can he confirm to the House that public safety remains the principal concern of Her Majesty's Government? That is bound to be of interest to all of us as legislators.

The Minister for Science, Energy and Industry (Mr. John Battle): It is traditional when Ministers reply to an Adjournment debate to congratulate the hon. Member concerned on winning the ballot. On this occasion, I sincerely congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on the tone of his speech. I say that because it is rare that an hon. Member manages to raise the level of an Adjournment debate above a constituency concern to a national and international concern and puts the arguments so forcefully on the agenda both of the House and of the public.
My hon. Friend accepted the difficulty and complexity of topics ranging across the economy, the environment and national and international safety. He and others


emphasised the international aspect of the debate—one that we cannot neglect. I am most grateful to my hon. Friend for doing that. Let me start by responding on that matter.
It was with dismay that we heard of the Indian decision, to which my hon. Friends have referred. Our Government have expressed their dismay at the news of the nuclear tests. I understand that further tests have taken place this morning, although I am not sure whether they have been officially confirmed at this moment. As holder of the presidency of the European Union, the Government have expressed our dismay to India. Foreign and Commonwealth Office Ministers are summoning the Indian acting high commissioner to express our deep concern about these worrying developments.
As my hon. Friend the Member for Bury, North explained, the problem of disposal of nuclear waste is a legacy. I acknowledge the work of the Socialist Environment and Resources Association. In a recent report on reprocessing, it said:
Although the organisation is against the generation of energy through nuclear methods in general, we accept that waste exists and that we have to deal with the nuclear legacy of the last 30 years.
I want to make that the starting point, as my hon. Friend the Member for Bury, North and other hon. Members did.
When the Labour Government came to office just a year ago, we inherited a legacy and the concomitant liabilities, just as we inherited an energy generation market in which two thirds of the major generating capacity of the nuclear industry was privatised. We resisted that move by the previous Administration, as they failed to resolve the problem of nuclear waste disposal, despite spending some £450 million on the Nirex inquiry without solving the problem of long-term dry storage. Today, in the new open energy markets, following privatisation and the opening up of the whole market to great changes, nuclear energy contributes about a third to the United Kingdom's electricity generation. That is a different climate from that which existed even a few short years ago.
As for the future of nuclear generation, it is obvious that there is no longer an economic case for building nuclear reactors in the present energy market structures. The Government certainly do not intend to subsidise the construction of any new power plants. That ought to be made absolutely plain. For those who accuse us of simply following the previous policy and doing nothing, I should add that we introduced the fossil fuel levy early in this Parliament to remove the subsidy of nuclear energy generation and switch it to support for renewable energy sources. That move was welcomed.
The House will know that the Government's policy on radioactive waste management policy is currently being considered by my right hon. Friend the Secretary of State for the Environment, Transport and the Regions, following the decision of the previous Secretary of State to refuse planning permission for the United Kingdom Nirex proposed rock characterisation facility at Sellafield, which was being investigated for a proposed deep disposal facility for intermediate-level radioactive waste. My right hon. Friend's consideration continues.
The House will be aware that the House of Lords Select Committee on Science and Technology is conducting an inquiry into radioactive waste management. My right hon. Friend the Secretary of State has announced that he

intends to study the Committee's conclusions carefully before initiating a period of public consultation. I am sure that, when that happens, my right hon. Friend will welcome all comments from Members of Parliament and others, as we try to move the policy forward.
In the 1960s, the Government of the day committed the United Kingdom to a programme of reprocessing spent fuel from nuclear power stations to separate plutonium for use as a fuel in future reactors. The Royal Society report said:
This decision was made in the light of prevailing assumptions about global stocks of uranium ore, the prospects of building a series of fast-breeder reactors and the role of nuclear power generally in the energy programme.
I agree with my hon. Friend the Member for Bury, North that the premise on which that decision was built no longer obtains, as the situation is radically different.
There has been major investment in reprocessing technology in the United Kingdom. Nuclear technology in Britain is world class, so we have been able to assist in incidents such as the one at Chernobyl. It is important to remember that those skills have been developed in this country.
United Kingdom generators have signed contracts for reprocessing work with several other countries. A stockpile of 54 tonnes of separated civil plutonium oxide from UK nuclear power generation has been built up, and, as the power stations are still in use, it is projected to be more than 100 tonnes by 2010. In the United Kingdom, plutonium has been separated from the other products in spent fuel from nuclear reactors since the 1950s. The Royal Society report acknowledged:
Even if the practice of separating plutonium does not continue, the existing stockpile still has to be managed.
The legacy of the stockpile will remain, and no matter how hard we try, we cannot wish it away: we must deal with it.
Sellafield and Dounreay provide reprocessing services, which are in demand from customers and users. Long-term contractual obligations have to be fulfilled. The customers are the energy companies. Changes have taken place within the industry. BNFL has been developed, Scottish Nuclear and Nuclear Electric are now owned by British Energy, and Magnox merged with BNFL. Privatisation has resulted in a range of companies in Britain.
The industry continues to be regulated in accordance with the highest safety standards to protect the workers, the public and the environment. The nuclear industry is rightly highly regulated by the independent Health and Safety Executive and the nuclear installation inspectorate. It is not left to market forces: it is a regulated business, and so it should be.

Dr. Lynne Jones: My hon. Friend refers to regulation of the nuclear industry, but is he not concerned about the transport of mixed oxide fuel in type B rather than type C packages, as recommended by the International Atomic Energy Agency? Conformity with the recommendation of type C packaging is not to be introduced until 2001.

Mr. Battle: A range of bodies, such as the Environment Agency and the Health and Safety Executive, are responsible for setting regulatory parameters. It is important that we press for the highest standards of regulation.
Countries that use THORP are, unlike India, signatories of the non-proliferation treaty, so there is no question of plutonium from THORP being sold on the free market.
My hon. Friend the Member for Bury, North mentioned the Sellafield liquid discharges. That matter is within the ambit of the Environment Agency, and I cannot answer for that body. It is not left to market forces or subject to prior political decision. The agency must monitor the industry and impose standards. I agree with the hon. Member for Daventry (Mr. Boswell) that the Health and Safety Executive's intervention is to be welcomed and not spurned, because it shows that the independent agencies are insisting that companies act responsibly.
On 30 January, a copy of my statement of Government policy on spent fuel management was placed in the Library. Paragraph 4 specifies:
it is for the range of owners of the spent fuel to determine whether it is economic to reprocess their spent fuel or not.
They have the right to exercise their option, but it also states that it is
subject to fully satisfying the regulatory requirements that are set by the Health and Safety Executive.
The radioactive substance division of the Department of the Environment, Transport and the Regions recently gave evidence to the House of Lords Select Committee on Science and Technology. It said that there is no marked difference in environmental impact between reprocessing and direct disposal of spent nuclear fuel. Dr. Brown said:
The analyses that have been made of the comparative environmental merits of both processes in past years have shown that there is not a marked difference in environmental impact between the two, or that any difference is lost in the degree of uncertainty between the two.
The shape of the industry has changed. The United Kingdom was the first country in the world to adopt nuclear power on an industrial and commercial scale when Calder Hall was commissioned back in 1956. Since that time, 19 nuclear power stations and 41 reactors have been constructed, of which 16 stations and 35 reactors are currently fully operational and three stations with two reactors each have been closed down and are being fully decommissioned. We are dealing not with only one or two plants, but with an extensive industry most of which is privatised, although some plants are in the public sector.
On 1 March 1954, the Government announced that a large-scale, experimental, fast-breeder reactor was to be constructed at Dounreay, the purpose of which was to demonstrate the feasibility of the process to increase the effective utilisation of uranium fuel by converting the non-fissile uranium into plutonium. The process has a long history. In 1958, the scope of Dounreay was extended to include fuel manufacture and fuel reprocessing, thus incorporating the whole range of

operational activities associated with fast-reactor technology. In 1977, the fast-reactor processing plant was shut down partially decommissioned, and reprocessing was moved to a new, refurbished plant.
At Sellafield, the Magnox reprocessing plant has reprocessed used nuclear fuel from the first generation power stations since 1964. The thermal oxide plant at THORP began operations in March 1994 following the granting of an appropriate discharge authorisation from the independent Environment Agency. It was designed and built to reprocess used fuel from advanced gas-cooled and light-water nuclear reactors. Since operations began at the end of March 1994, some 1,450 tonnes of spent fuel have been reprocessed.
The Environment Agency is considering responses to public consultation held between 14 and 16 March on the MOX applications. That matter is still being dealt with by the Department of the Environment, Transport and the Regions, so I cannot comment on it further.
On openness and transparency, I should like to say to those who accuse the Government of hiding information that I announced to the House on 2 December an agreement for an informal group of nine countries to publish guidelines so as to provide an internationally accepted framework for the management of plutonium. I hope shortly to announce the publication of the figures for the UK's holding of civil plutonium as at the end of December 1997. We are taking action to add transparency to the process in Britain and internationally.

Mr. Chaytor: In the interests of openness and transparency, in the remaining one and a half minutes, will the Minister make a specific response on the Royal Society's recommendation for a detailed investigation, with public consultation, of all the options available to deal with the plutonium stockpile?

Mr. Battle: I appreciate that, in a debate like this, it is difficult to reply to all the points in the short time left. Such a debate is a time for Back Benchers, not for Ministers to give a full statement. However, let me say that spent fuel and plutonium must be managed, whether or not there is reprocessing. I emphasise that reprocessing does not cause additional radioactivity. The waste that is separated from the used fuel in processing has slightly less radioactivity and less toxicity than the fuel from which it comes. However, the existence of plutonium stocks, in whatever form, is of concern with regard to radiotoxicity and proliferation.
Stocks of plutonium, whether separate or not, civil or military, need to be safely, securely stored and used subject to arrangements designed to ensure that the material would be available only for a proper purpose. I would say—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order.

Electoral Fraud (Northern Ireland)

Mr. William Ross: The House has just been discussing an insidious and dangerous material, plutonium. I now bring to the attention of the House a practice that may not be quite as insidious as its perpetrators would wish, but which is as dangerous to the electoral process—and therefore to democracy in this country—as plutonium is to human life and to life in general.
I have seen my fair share of elections in Northern Ireland, not only as a candidate for councils and for this place, but as an Ulster Unionist party worker. I have been well aware of the dangers of electoral fraud taking place. It is not a new phenomenon. The old catch-phrase, "Vote early, vote often," is a testimony to what took place in past years in some elections.
From the time of my earliest forays into politics, I was warned to keep a sharp look-out on election day. I also learned that fraud did not start on polling day; that was the day on which the efforts put in train many months previously bore fruit. However—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman must be heard. I am surprised that the Minister for Science, Energy and Industry is conducting a conversation in the Chamber.

Mr. Ross: However, in those days, electoral fraud was not the danger to the validity of the electoral system and to the democratic process that it has become in recent years. Before the present violence began, a far larger percentage of our population in Northern Ireland lived in mixed communities. The party activists—there were many—therefore had a far greater knowledge of the total population than is now possible. In other words, the ghettoisation of Northern Ireland as a consequence of terrorist violence has increased the difficulties of political organisations in the Province.
That means that, whereas in the past the problem was largely confined to very few areas—for example, west Belfast, which was always a cockpit of politics—it is now far more widespread. Moreover, because electoral fraud is almost all carried out now by the Sinn Fein-IRA elements, it has become a carefully planned, sophisticated operation, far removed from the amateurish standards that were the norm when it was organised by individuals, not by an organised body of people.
Labour and Conservative Governments have been aware of the problem for many years, but have been distinctly loth to take action to stop it. I therefore welcome the Secretary of State's review team, set up in October 1997, which was a fulfilment of assurances given by the hon. Member for Clydebank and Milngavie (Mr. Worthington), now Under-Secretary of State for Northern Ireland, on 12 March 1997, to which reference may be found at column 397 of Hansard.
I also welcome the action taken by the Northern Ireland forum and the excellent report that its members produced, for which I happened to give evidence, some of which is reproduced on page 105 of the second report of the Select Committee on Northern Ireland Affairs for the 1997–98 Session. I very much welcome the Select Committee's investigation and report, which is before the House and is relevant to the debate.
A detailed and useful picture emerges as to how fraud is carried out. It is clear that it is massive and on-going—and that it must be stopped. It is interesting to read the last two paragraphs of the Sinn Fein memorandum on page 75 of the Select Committee report, for it is obviously the only party in Northern Ireland that wants the safeguards relaxed—I believe that we may draw certain conclusions from that.
On page 10 of the Select Committee report, the chief electoral officer for Northern Ireland—a man of vast experience in that field—informed the Committee:
I am referring to the two 1981 by-elections in Fermanagh-South Tyrone where I travelled round the polling stations and I saw organised personation to such a level that I went to the Secretary of State afterwards and said that in my opinion it was totally unacceptable and some change must be made to enable a code to be obtained over that particular process.
Therefore, the problem is not new. There was organised electoral malpractice, personation and vote stealing on a massive scale at that time.
Of course, we should remember the reasons for the 1981 by-elections. There was the death of Frank Maguire, an independent nationalist Member of the House, followed by the election of Mr. Sands, the first hunger striker to die. It was a time of considerable political emotion in Northern Ireland, especially in that area. However, we can see from that statement how much it was capitalised on and used by the terrorist organisation of which Mr. Sands was a member.
On pages 11 and 12 of the Select Committee report, my hon. Friend the Member for Lagan Valley (Mr. Donaldson) asked many interesting questions and made several interesting points. For instance, he pointed out:
During the recent local government elections in May this year 35 applications were received supported and signed by a certain doctor (whose name I will hold for the meantime) who is known to me in the health centre in Omagh. He completed a part 3 declaration in support of each application and part 3 states: 'I further attest that he or she is being treated by me, is receiving care from me in respect of that physical incapacity and that they are likely to continue indefinitely for a period of months.' These applications all related to persons resident in the Mid Tyrone electoral area within the constituency of West Tyrone. They were rejected by your office"—
that is, Mr. Bradley's office—
as the applicants did not live within the catchment area of the Omagh health centre and on investigation it was found that these people were not registered with that health centre, in other words the doctor who signed these applications attesting that he was treating these people was not treating them.
On page 12, my hon. Friend says:
You may be aware of a BBC … Spotlight
programme
which highlighted the problems with multiple registration particularly in the constituency of West Belfast. The reporters in that programme came up with a number of clear examples of multiple registration. One example was where six people claimed to be tenants in a one bedroom flat and in fact none of them was actually resident at that flat. Again, another situation where five residents were registered at another one bedroom flat but could not be traced. Another where six people were sharing a one bedroom flat, three of whom could not be found. And another case of two out of five people registered at another flat who were registered at other addresses within the same constituency as well as two further addresses in a different constituency. Certainly, from my recollection, they are all clear cases of abuse of the registration system.


That gives a clear idea of the position from the viewpoint of the Ulster Unionist party, but the most damning words in the report were uttered, not by an Ulster Unionist representative, but by Mr. Alex Attwood, an active and well-known member of the Social Democratic and Labour party on Belfast city council. He tells us on page 50:
The evidence the SDLP produced was on the Draft Register
of electors
and many of their concerns centred on Divis Tower in the Falls Road. Normally around 160 people live here, but according to the draft electoral roll there are 22 extra residents.
He mentions various flats, some of which may well be those mentioned by my hon. Friend the Member for Lagan Valley. He continues:
According to the draft electoral roll this two-bedroom flat is home to five men, including Terence Clarke"—
better known in Belfast as "Cleeky Clarke"—
Robert MacMahon and Sean O'Neill. These names, although slightly misspelt, matched those of close associates of Gerry Adams.
There is more in the next column, to the effect that those people appear not only at that place but throughout Belfast, and especially in north Belfast. Every one of them is a well-known thug, to be charitable. We simply cannot allow that to continue, and there must be action to stop it. For those who do not want to wade through the 108 pages of evidence, I suggest a reading of the summary of conclusions and recommendations, which are quite damning.
It is plain that the provision of an accurate register of electors is the first essential in stamping out electoral fraud. It is an established fact that the key to the prevention of widespread fraud is a means of accurately identifying each elector at the compilation of the register and in the polling station, or when the person is applying for an absent vote. That is not a new conclusion, because the present requirement that each elector should identify himself before receiving a ballot paper is an effort to prevent fraud.
The system has not worked because the documents that are required do not all have photographs and many of them are easily acquired by the fraudsters. That was acknowledged last year by the present Under-Secretary of State, at column 398 of the Official Report of 12 March 1997. I am not sure that there is a foolproof or easy answer, but the essentials of a better method of identification are easily derived from the mass of evidence that is with the Government. They are an identity card with a photograph of the person who is named on it, which should also contain the date of birth and a number that is unique to the card owner. It should either be the person's national insurance number, although there are difficulties with a large surplus of national insurance numbers, or the medical card number.
It would be a good idea for the card to be a medical card and, of course, that is close to the concept of a national identity card. Perhaps the Government will clarify their position on that issue. Such a card was proposed in the previous Parliament by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who is now the shadow Foreign Secretary. The medical

card would also be useful if the holder had an accident. Such a triple check would make it difficult to register more than once, and a computer system would pick that up as it picks up registered debts. The photograph would make visual identification in the polling station of the elector relatively easy, beards aside.
I do not accept all the arguments by the so-called civil libertarians against an identity card. Most other countries in Europe have them, and it is nonsense to think that a totalitarian Government would not rapidly introduce such a system anyway. The issue creates no danger to civil liberties.
The Minister will say that it would be almost impossible to get accurate photographs of everybody in Northern Ireland. I again draw to his attention the good news that I gave him a week or two ago in another debate. Photographs with the correct name attached are already to hand for a large proportion of the electorate. They exist in the Driver and Vehicle Licensing Northern Ireland agency in County hall, Coleraine.
The Minister will recall that, on 3 April, more than 1 million people in Northern Ireland had driving licences. Few of the photographs on them are false, because they would be of no use to the licence holders. About two or three years ago, the agency studied the implementation of a national identity card. The agency holds the date of birth of all licence holders. Some women may have avoided giving that. but that is not a real problem. Each licence has a unique number that could be used if needed. The system uses a card of the same size as a credit card—it is a blank credit card—and production could be carried out in Coleraine at fairly high speed, although it would still take some weeks.
On 3 April there were 1,082,936 licence holders on the computer system, and every licence has a digital photograph attached. After allowing for the number of people who have departed, the photographs of a huge proportion of the people of Northern Ireland over the age of 17 are in a computer in Northern Ireland and could be switched out at any time. That represents 88.7 per cent. of the population of the Province over the age of 17.
The numbers associated with the card should be on the electoral registers that are used by officials in the polling stations, and should be available to the chief electoral officer for cross-referencing to his computer list. However, they should not be on the registers that are available to the public. If that system was implemented, forgery would be extremely difficult, because the fraudsters would not be able to produce cards with the correct numbers. To steal votes, they would need electors' cards and would have to reprint them with different photographs. That would be a much more sophisticated operation than the one in which they currently engage.
Next week, we have a referendum on which the future of Northern Ireland will depend, and the accurate identification of electors is no more possible in that vital election than it was in the two elections last year. Steps should have been taken long ago to deal with electoral fraud. I hope that the Government will say what they intend to do and when, so that we may have honest electoral results in all parts of Northern Ireland, not only in areas where Sinn Fein is weak.
The debate is about electoral fraud, but there are other concerns about elections. People should not be prevented from voting, but if we restricted postal and proxy voting,


that right would be curtailed. We must face that delicate and difficult issue, but it must be dealt with properly. There must be a more sensible approach to the use of the driving licence for purposes of identification. At present the whole licence, document card and all, has to be produced. That is obviously nonsense, because the plastic card with the photograph, which most people carry in their wallets, should be sufficient.
People can go into a polling station and say to the presiding officer, "Hello John, how are you? Here is my driving licence." They are told, "It is insufficient, William. You are not allowed to vote. Away you go." Many people walk out in fury and do not come back. That is crazy. I have raised the matter for years and I have been told, "Perhaps they go home and come back." They will not come back if they live five miles away. A proper identity card for this purpose is needed. It would also be useful for other purposes, and a medical card is the one that I favour.
Common sense must be applied to the identification of Northern Ireland people. We know the problem and we know where it is and who is behind it. When will the Government act? All hon. Members and the vast majority of Northern Ireland people want honest election results. All the information is available. When will the Government get on with it?

The Minister of State, Northern Ireland Office (Mr. Paul Murphy): I thank the hon. Member for East Londonderry (Mr. Ross) for raising an exceptionally important issue. I encountered the matter almost in the first week of becoming a Minister, because, of course, directly after an election, matters are fresh in politicians' minds. Since that time, my right hon. Friend the Secretary of State and I have taken a special interest in electoral malpractice. I pay tribute to the members of the Select Committee on Northern Ireland Affairs, who produced an interesting and full report. I also pay tribute to those who took part in the forum talks and who met me to present their report and findings. I give the undertaking that the findings of both bodies will be taken into account in the current review. I shall come to that shortly.
The hon. Gentleman referred to the Select Committee report. On page 105, he is reported as saying:
I agree with the hon. Member; the registration process in Northern Ireland is much better than that in the rest of the United Kingdom. It is carefully done and people are followed up.
Because of the problems of malpractice and fraud that have been experienced in Northern Ireland, aspects of the electoral system there are better than in the rest of the country. There is a residency qualification and a declaration against terrorism. Documents are specified and, of course, voting is by proportional representation.
The Government take abuse of the system extremely seriously; we believe, above all, that the right to vote is central to democracy. If the integrity of that process is abused, democracy itself is abused. The importance that we attach to the issue is illustrated by the speed with which my right hon. Friend the Secretary of State responded to allegations of malpractice after the elections last year, by establishing the review of electoral procedures. Since July, the review has been analysing every aspect of electoral procedure in Northern Ireland,

with a view to enhancing the system generally, but with a particular interest in investigating the incidence of malpractice.
On 31 July last year, I asked voters in Northern Ireland to write in with their concerns or evidence that they might have of electoral abuse, and their suggestions for improvements. I can tell the hon. Gentleman that the response was not particularly good. Consequently, some months later, in October, we issued a second press release and I personally sent a letter to every political party that had not yet submitted papers for the review. Even then, I suspect, the response was a little disappointing. Nevertheless, we have worked very hard.

Mr. William Ross: One of the reasons why the Minister may not have got a response from my party and possibly from others was that we knew that the other inquiries were going on, and we assumed that both the forum and the Select Committee would deal with the matter. That has indeed been done very well.

Mr. Murphy: I take the hon. Gentleman's point, but his party was not the only one involved. There were smaller, newer parties that could have helped us in our review.
We had a great deal of input, and still do, from the chief electoral officer, Mr. Pat Bradley. The review team has studied and carefully considered all the points made by the forum committee, the Select Committee on Northern Ireland Affairs and the parties that have written to us.
The hon. Gentleman referred to specific examples of electoral malpractice. I shall deal with three aspects, starting with electoral registration. Some have alleged that the Northern Ireland electoral register is inaccurate, and that those who wish to abuse the system exploit procedures in order to register themselves or others when they do not fit the eligibility criteria. Our research so far has indicated that such malpractice is possible, but it must be said that no specific, provable cases of deliberate attempts to abuse the system have emerged.
As has been pointed out, the method of registration in Northern Ireland is better than that in the rest of the United Kingdom. A system of door-to-door canvassers is used every September to compile the register. The canvassers offer help and advice to householders on how to fill out their forms, and help to explain the eligibility criteria. Furthermore, in the attempt to collect all registration forms in person, they call at each household three times, before leaving the form to be returned by post. The rate at which forms are completed with a canvasser present is regularly over 90 per cent. In the preparation of the last draft register, 408 canvassers were employed and more than 622,000 residential units were canvassed.
After the registration cycle, the draft register is published to allow for a system of claims and objections operated by the chief electoral officer to take place. As the hon. Gentleman will know, objections are allowed to any name included on the register or claims for names to be added. The point made by Mr. Attwood in his evidence could be covered by that procedure. Names can be added to the register throughout the year, by a monthly claims process. As the hon. Gentleman knows, he and his


parliamentary colleagues are sent by the chief electoral officer the annual timetable of dates for the monthly hearings.

Mr. Harry Barnes: The report by the Northern Ireland Affairs Committee suggests that a rolling register that would allow people's names to be added and deleted according to area as they moved around would be fruitful in Northern Ireland. It would be particularly fruitful in dealing with the problem of multiple registrations, which are open to abuse, because a system of multiple registrations would not be necessary for people moving from one area to another. I realise that that is tied in with the general review of such matters throughout the United Kingdom.

Mr. Murphy: I am grateful to my hon. Friend. He knows that the recommendations of the Select Committee, of which he is a member, are important and will be taken into account. The review has identified various possible improvements, and we are investigating their long-term feasibility.
Personation at polling stations may spring first to people's minds when the issue of electoral malpractice is raised. It caused public concern in the 1970s and 1980s and led to the introduction of the Elections (Northern Ireland) Act 1985. The hon. Member for East Londonderry rightly referred to the requirement for a voter to produce one of a number of valid, specified documents at a polling station before being issued with a ballot paper. The list was drawn up with the intention that all registered voters would have access to at least one of those documents.
I am aware of the concern about the use of the medical card as a form of voter identification, which has been expressed by individuals and many parties in Northern Ireland. I take the hon. Gentleman's point about the use of another document, perhaps a registration document. Those are matters that the review is currently considering. Of course, it is important that documentation should be provable and have the confidence of everyone concerned.
We must be careful, however, not to withdraw documents without an adequate replacement being made available. It is not an option to disfranchise genuine electors in order to tighten up voting regulation. The hon. Gentleman referred to the miles that people must travel, especially in rural areas, in order to vote, and the fact that they rarely return after being turned away. Regulations exist that allow for the challenge and arrest of individuals suspected of personation, but as the hon. Gentleman knows, they are rarely used.
From general correspondence and feedback, it has become clear that the greatest source of concern about electoral malpractice is the absent voting system. The procedures that we have inherited do not appear to include the checks that are present for registration and voting at polling stations. There is scope for abuse of the regulations, and the absent voting procedures seem to be the ones most vulnerable to malpractice.
The Government have already taken steps to make the system more secure for the referendum and the possible assembly elections. The electoral office will be allowed a slightly longer period for scrutinising the absent voter applications, which would permit the identification, and therefore the rejection, of fraudulent applications.
In addition—this was dealt with in the Select Committee report—the wording of the medical declaration is being changed to require the witness to declare that he has seen the applicant in connection with the medical condition. That should aid the identification and prosecution of medical practitioners who fraudulently attest forms. The hon. Gentleman referred specifically to the comments on that in the Select Committee report. We shall examine the operation and success of those measures to decide whether they should be implemented for future elections.
The review is looking into the absent voting system. It submitted an interim report on electoral malpractice in November last year. I must repeat that no hard evidence of electoral abuse has been presented, but there can be little doubt that there is a general perception in Northern Ireland that electoral malpractice is being perpetrated on a large scale, that electoral abuse exists and that something must be done. I strongly agree that abuse is unacceptable and that it is essential for people to have confidence in their electoral system.
The chief electoral officer has been very open in his judgment of the system. Although he agrees that no real proof of malpractice exists, he has publicly expressed his concern that certain irregularities strongly suggest that certain areas of the electoral process at the very least arouse a suspicion of foul play. I believe that, once the review has reported, we shall want to carry out full consultations with the parties before introducing changes. That means that it is unlikely that any fundamental changes will be made before the elections to the European Parliament in 1999, but some may well be introduced after that date.

Mr. William Ross: The Minister stated that the chief electoral officer said that there was no evidence of electoral malpractice, but on page 10 of the Select Committee report Mr. Bradley states:
I saw … personation to such a level that I went to the Secretary of State".
He witnessed it himself.

Mr. Murphy: I was referring to the absent voter aspect. I entirely accept that electoral malpractice exists, and furthermore that the perception of such malpractice leads to a lack of confidence in the electoral system. It is important that the review takes into account all the views that have been expressed by hon. Members, the Select Committee, the forum and political parties. When the review emerges later in the summer, I believe that its recommendations will produce the confidence that is necessary for proper democracy in Northern Ireland.

Mr. Deputy Speaker: Order. We now come to the debate on road traffic accidents.

Road Traffic Accidents

1 pm

Ms Patricia Hewitt: I propose to speak for about 10 minutes and then, with your permission, Mr. Deputy Speaker, I shall allow my hon. Friends the Members for Hendon (Mr. Dismore) and for Barrow and Furness (Mr. Hutton) to make brief contributions before the Minister replies.
This debate is a memorial to one of my constituents, Chantel Crofts Botterill, who was killed by a car driver last September. Chantel died on a Sunday afternoon. She had gone out with two of her sisters and a friend. They were walking along the pavement of one of the main residential roads in my constituency, Fosse Road South, when Chantel wanted to try out her friend's new bike. She hopped on and rode for a few yards, still on the pavement, which at that point was raised well above the road and guarded from it by a metal railing. She rode for only a few minutes until she was hit by a car that had swerved off the road, careered on to the pavement and smashed through the railings into her. She died instantly. She was 15.
Chantel's parents, Gail and Ronald Botterill, are here for this debate. I pay tribute to their courage and to the courage that so many other bereaved parents and families have shown in coping with their loss. I am a mother as well as a Member of Parliament and can imagine nothing worse than to lose a child. I honour and share the Botterills' determination to do everything they can to prevent other families from suffering as they have suffered.
My constituents have launched a petition and have already gathered hundreds of signatures. They want—we all want—roads that are safe for our children. They want, and we should all want, laws that hold drivers responsible for their actions, and provide proper support for the families of people killed on the roads.
Chantel was unique in her life, but she was not unique in the manner of her dying. In 1996, the last year for which we have statistics, 186 cyclists and 995 pedestrians were killed by car drivers—that is 1,181 men, women and children. Like most right hon. and hon. Members, I drive a car. It is an enormous personal convenience and I would not want to be without it, but I also know that a car is not merely a personal convenience, but a lethal weapon. A family saloon travelling at 35 mph has 90 times the power of a shotgun blast and at 40 mph a car that hits a pedestrian or cyclist will almost always kill.
The driver who killed Chantel has been charged with causing death by careless driving while under the influence of alcohol. It took several months for that charge to be brought—several months of delay that added to my constituents' distress.
I raised the case with the Director of Public Prosecutions and, finally, a senior Crown prosecutor reviewed it and agreed the charge. As the driver will be committed for trial next Monday, I will say no more about that prosecution, except to stress how rarely that charge is used. In 1995, of a total of 3,274 deaths in road crashes, there were only 13 charges for murder and manslaughter, and 369 for causing death by dangerous driving or careless driving while under the influence. In the majority of cases—seven out of eight—the horror of a death on the

roads is followed by nothing more than a charge of careless driving and, if the driver is convicted, a fine of a few hundred pounds and the imposition of a few penalty points.
An inspector of the Leicestershire constabulary, with whom I have liaised on the death of Chantel, reminded me yesterday of the conviction in Loughborough magistrates court of a driver who killed two people in a crash on the A1. He was charged with and convicted of careless driving and was punished—if we can call it that—with a fine of £250, £120 costs and six penalty points. That is why we need a change in road traffic law.
These are not tragic accidents, as we so often refer to them, but the predictable result of criminal offences. Driving too fast, which is the cause of at least one in three road accidents and more than 1,000 deaths a year, running through a red light and accelerating across a pedestrian crossing are not acts of unfortunate carelessness, but crimes that will obviously, in many cases, kill or injure an innocent person. However, at present, the law leaves the police, the prosecuting authorities and, above all, the families of victims in an intolerable position. If the authorities believe that they cannot prove dangerous driving—and it is difficult as the law stands to do so—and if there is no evidence that the driver was using drink or drugs, they are left with nothing else than bringing a charge of careless driving, with the derisory penalties that usually follow a conviction.

Mr. Brian Cotter: I wish to offer my support. Relatives of victims in my constituency have pointed out to me exactly what the hon. Lady is saying. They are left grieving, because they do not feel that they have had restitution.

Ms Hewitt: I am grateful to the hon. Gentleman for that support.
Drivers will not take bad driving seriously when the courts and the law do not. For that reason, we need a new offence of causing death by negligence, as is the case in Germany, or causing death by driving—motor manslaughter—as in California.
The issue crosses departmental boundaries, but I hope that my hon. Friend the Minister will be able to tell us when the badly needed review of the Road Traffic Act 1988 will take place, and will assure the House that Ministers will seriously consider the changes that I and other hon. Members have proposed. I hope, too, that the forthcoming White Paper on transport will contain comprehensive proposals for cutting drivers' speed. In the meantime, will my hon. Friend ensure first, that, in future, the statistics for convictions for careless driving offences distinguish those in which a death or serious injury has been caused?
My second concern is with sentencing. I know that my hon. Friend the Member for Hendon will take up the issue shortly. I strongly support the North committee's recommendation, made many years ago and sadly not implemented, that the courts should be able and, indeed, required to take account of the consequences of the road traffic offence in determining sentence.
I welcome the Court of Appeal's decision this morning in one particular case, but I think that we need to go further. Any conviction for a road traffic offence where someone has suffered death or serious injury should, in


my view, require the courts to disqualify the driver for a minimum period of five years. No driver who has killed and been convicted of a road traffic offence should be able to drive himself away from court.
The third issue that I wish to raise briefly is drug-driving. The previous Conservative Government took many steps, which we all welcome, to reduce the incidence of drink-driving and to make drivers understand the seriousness of it; of course, there is still more to be done on that. I believe that we need a parallel effort on drug-driving. I welcome the recent announcement by the Minister for Roads, Baroness Hayman, about the trial of a roadside drug-testing kit. We should require the police, in cases where there has been a death or serious injury, routinely to test the driver for drugs. We also need a clear standard for drug use which is equivalent to the legal limit on alcohol. If a blood or urine test shows that the driver has been using an illegal drug, that of itself should constitute unfitness to drive within the terms of section 3A of the Road Traffic Act.
Finally, there is the issue of support for families—the secondary victims, as Mr. and Mrs. Botterill call themselves. On the various occasions when I have been burgled, I have received without any prompting a letter from Victim Support. I have not felt the need to use it, but I have known that Victim Support was there if I needed it. I was appalled to discover that Mr. and Mrs. Botterill have received no such offer of help. They were not given the support that would, for example, have been received by the family of someone who had been murdered. Whatever the law says, from Mr. and Mrs. Botterill's point of view, their daughter has been murdered.
I do not know whether such support would best be provided by Victim Support or by organisations such as RoadPeace and BRAKE, which do excellent work. However, I know—I hope that the Minister will ensure that this takes place—that all police forces should notify the support services when there is a fatal road crash and ensure that the bereaved receive proper advice and information.
The Government were elected on a promise to be tough on crime and tough on the causes of crime. My hon. Friends and I want to hear from the Minister that the Government will be equally tough on car crime, and ensure that the rights of car drivers are properly matched by their responsibilities. That is the least that we can do for Chantel, for all the other innocent people who have been killed by car drivers, and for the families who have been left to grieve.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. It is clear from what the hon. Lady has said that the tragic case to which she referred is sub judice. Under the rules of the House, Members should not debate that case, which is shortly to be dealt with in the courts.

Mr. John Hutton: First, I express my gratitude to my hon. Friend the Member for Leicester, West (Ms Hewitt) and the Minister for allowing

me to make a short contribution to this important debate. I echo and support my hon. Friend's call for a review of certain aspects of the Road Traffic Act 1988.
I shall confine my remarks to section 3 of the Act and the offence of careless driving. I ask my hon. Friend the Minister to respond to two points, if he can. First, an inadequate range of options is available to the magistrates courts when they are sentencing in careless driving cases. Under current legislation, there is the ability only to disqualify a driver, at the magistrates' discretion. There is no mandatory disqualification and no mandatory requirement for a convicted careless driver to undergo a compulsory road driving test again. That is a mistake. It is a gap in the law and I hope that my hon. Friend the Minister will consider whether that gap can be closed.
Secondly, I strongly support my hon. Friend's recommendation that the Minister should take the opportunity to look again at the North committee's report, which recommended that magistrates courts should have the power to take into account the consequences of careless driving. One of my constituents was killed last October—a three-year-old girl, Wallis Fenton—by an act of careless driving. My constituents' reaction to the sentence imposed in that case has been general concern that magistrates do not have a broad enough range of sentencing options that properly reflect the importance of human life and punish careless drivers appropriately.
There is a gap in section 3 of the Road Traffic Act. Careless drivers are not currently subject to appropriate sanctions and penalties. I hope that my hon. Friend the Minister will be able to say something encouraging about his review of road traffic legislation in this respect.

Mr. Andrew Dismore: I congratulate my hon. Friend the Member for Leicester, West (Ms Hewitt) on securing this important debate. During 20 years' experience as a personal injury lawyer, I have seen many bereaved families who have suffered tragedies, and I have heard them express their feelings of injustice, both in civil and criminal law.
All the points that my hon. Friend has made are illustrated by the case of the Asamoah family. Hans Asamoah was killed tragically on 22 September 1996. His mother is listening to the debate.
The facts are that a car driven by Nicholas Tunstall crashed. Hans, a passenger, was thrown out of the car and killed instantly. Tunstall decamped and gave a false name at the hospital. He initially falsely claimed to have been a passenger; he refused a blood test. He showed no remorse. When charged with causing death by dangerous driving, he pleaded not guilty at the Crown court. After half an hour, the jury found him guilty. He was found to have had two and a half times the alcohol limit and to have been using cannabis. The car had been driven at 70 mph in a 30 mph limit.
On 5 February 1998, the case came to sentencing at the Crown court. Mrs. Asamoah had previously been promised that she would be informed that it would be necessary for her to attend court. Instead, she was told that she need not go. A letter was read out in court from the parents of another victim. Tunstall was sentenced to 240 hours' community service.
Mrs. Asamoah first heard of the result when she read it in The Sun. Fortunately, she is a determined woman. Her distress, although it was compounded by the result,


led her to take up the matter with me and the Attorney-General, who, I am pleased to say, referred the matter to the Court of Appeal, which heard the case yesterday. I am also pleased to say that the Court of Appeal increased the sentence to one of three and a half years' imprisonment, with a five-year ban and an obligation to undergo a re-test, as suggested by my hon. Friend the Member for Leicester, West. Mrs. Asamoah now feels that justice has been done. However, no sentence, lenient or harsh, can ease her pain and bring her son back.
The lessons from the case are clear. It is not only a matter of changing the law. We must also ensure that sentencing policies are carried out fully and are brought to the attention of the court, in the same way in which the Court of Appeal made its recommendations yesterday. The Crown Prosecution Service must adopt a more aggressive line in these matters. As my hon. Friend has said, the victims must have their views taken into account and heard. They must be treated with consideration and tact, and they must be given proper information about what is going on.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): I begin by saying how moved I was, and how sorry to hear the description given by my hon. Friend the Member for Leicester, West (Ms Hewitt) of the tragic circumstances of the death of Chantel Crofts. When listening to my hon. Friend, I realised that I knew the relevant part of Leicester reasonably well. I know Fosse Road South, which is to the west side of Narborough road, where the incident happened.
Like my hon. Friend, I am a parent. I have two young children. I agree with her that I cannot imagine anything worse than the loss of one of my children. I convey my sympathy and sincere condolences to Chantel's parents, Mr. and Mrs. Botterill, and to her sisters and brothers at this difficult time for them. I also convey condolences to Mrs. Asamoah, in the case raised by my hon. Friend the Member for Hendon (Mr. Dismore). Similarly, I offer condolences to the family involved in the case raised by my hon. Friend the Member for Barrow and Furness (Mr. Hutton).
I cannot comment on the circumstances of the individual case raised by my hon. Friend the Member for Leicester, West (Ms Hewitt) because, as Mr. Deputy Speaker rightly said, it is sub judice and it would be improper for a Minister to comment on the circumstances at this time. However, I am concerned at the delay that she mentioned and I will ask for a report seeking reasons for that.
My hon. Friend the Member for Leicester, West made various proposals for legislative change in her usual persuasive style, and I will consider them. These are important issues and we want to ensure that we get it right. Criminals who use cars are criminals none the less, and we intend to ensure that our response is firm and tough. As my hon. Friend requested, I will liaise with colleagues in other Departments, particularly the Department of the Environment, Transport and the Regions, on how we can tackle road safety issues more effectively. I undertake also to write to my hon. Friend about the proposal that the police should have available

to them the pamphlet from BRAKE, and that the support services should be notified of the possible need to help bereaved families in circumstances such as this.
That said, I shall now seek to address the broader issues. This involves difficult and complex issues of charging and sentencing, and I hope that I can address them with a degree of sensitivity, which is important in cases such as this. Sometimes, those who kill on the roads are punished only by relatively low fines. My hon. Friend the Member for Barrow and Furness described circumstances in which offenders have been charged with careless driving.
I can well understand the deep anger and frustration felt by relatives who have lost a loved one and who believe that the person responsible has not been adequately punished. Such cases pose particular difficulties for the court. No one can dispute the seriousness of the consequences when death is the result of a crash, but the criminal law must consider the extent of the offender's culpability. The difficulty in these cases is that the offender has, in law, acted carelessly rather than intentionally, but the consequences of his act are disproportionately serious.
As my hon. Friend the Member for Leicester, West said, this whole subject was looked at in depth by the North committee in 1988. The report concluded that it would be wrong to impose on a driver severe penalties for tragic consequences if his actions amounted to carelessness.
The Government must ensure that the courts have the powers they need to deal with the offenders who appear before them. That is certainly our responsibility. It is the responsibility of the courts to deal with the cases that come before them and to decide on the appropriate sentence in each case. We believe that the law should provide appropriate sanctions to enable the courts to deal severely with instances of bad driving that are worse than careless, and where the offender bears a greater responsibility for his actions.
As hon. Members will know, there is a graduated scale of penalties. Careless driving carries a maximum fine of £2,500 and an obligatory endorsement of the offender's driving licence. Driving while disqualified and drink-driving both carry maximum penalties of six months' imprisonment, a £5,000 fine and an obligatory disqualification from driving. More serious driving offences rightly carry more severe penalties. The maximum penalty for dangerous driving is two years' imprisonment and for causing death by dangerous driving or driving while under the influence of drink or drugs, the maximum penalty is 10 years' imprisonment. The courts may disqualify the offender from driving a motor vehicle for a period of disqualification up to life. That framework gives courts the powers to impose severe penalties on those who commit the most serious driving offences.

Ms Hewitt: Of course I accept that the gradation of sentences according to the severity of the offence provides part of the framework for the sentencing process. However, does my hon. Friend support, as I do, the recommendation of the North report that the
courts should be able to take consequences into account in sentencing for all the general bad driving offences"?


In that way, in an offence such as careless driving, the consequences can be taken into account.

Mr. O'Brien: We have to look at the issue of consequences and intention. We must be aware that a judge may have to consider whether a person is to be sentenced for unforeseen and clearly unintentional consequences. The courts have to balance that carefully when they make a decision in such cases. The prosecution will have to decide at the beginning of the process how it is to view the case, and ensure that the court is able to make the right judgment on the appropriate penalty.
The "causing death" offences were first introduced in 1956 because there were concerns that juries were unwilling to convict drivers for manslaughter. The offences were redefined in 1972 and again in 1988. In 1991, a new offence of causing death by careless driving while under the influence of drink or drugs was created. In 1993, the maximum penalties for causing death by dangerous driving or while under the influence of drugs or alcohol were doubled from five to 10 years' imprisonment.
The current framework is broadly based on the North report, which addressed in great depth concerns that the law relating to road traffic accidents had not developed in a satisfactory manner. A number of factors were given detailed consideration, including the possibility of a new offence of causing death by careless driving. The report concluded that it would be wrong to visit on a driver severe penalties for unforeseen tragic consequences if his or her actions were careless.

Mr. Ben Bradshaw: My hon. Friend talks about unforeseen consequences. Surely, as my hon. Friend the Member for Leicester, West said, a motor vehicle is a lethal weapon. How can my hon. Friend call the possible fatal consequences of bad driving unforeseen? Every driver should be aware that such a consequence is foreseen if they drive badly.

Mr. O'Brien: My hon. Friend misunderstands me. Any driver of a motor vehicle has to be aware that he is driving a potentially lethal weapon. If consequences occur that are the result of him behaving in a way that could cause

death, that must be taken into account by the court. Sometimes, circumstances occur that are unforeseen, and we must be wary of the way in which we impose obligations on the court and constrain judges in their ability to impose sentences. The judge must be given a level of discretion that enables him to tailor the sentence to the circumstances.
I am a little wary of going as far as some hon. Members have suggested in constraining judges in the sentences that they can impose. I know from my practice in the courts that each case is very individual. Many different factors have to be taken into account by judges, and I am anxious to ensure that that occurs in driving cases where people are injured or killed as much as in other circumstances.
The Government's aim is to ensure that we have provisions that enable the court to deal with cases in the best way possible. We need to ensure that the Crown Prosecution Service and the police are able to put forward appropriate charges. We are seeking to provide a balance of various levels of charging and appropriate sentencing, which the courts and the prosecuting authorities can consider and tailor to the circumstances of individual cases.
It is relevant in this debate to remind hon. Members of the important provisions in the Crime and Disorder Bill, which will place a new statutory duty on the Court of Appeal to consider improving existing sentencing guidelines when cases come before the court, and to establish the principles that guidelines take into account. The Bill will establish the new sentencing advisory panel to provide advice on sentencing to the Court of Appeal and to help inform guidelines. The panel will provide the court with statistical information and will consult a wide range of interested parties, including, importantly, victims' groups. We believe that those provisions will lead to more comprehensive sentencing guidelines, which will ensure greater consistency in sentencing.
I have listened carefully to this debate. I shall liaise with my colleagues in other Departments to ensure that we get it right in tackling these serious and important issues. They need to be dealt with very sensitively and to be given the importance that they deserve, and we are determined to ensure that they are. I am grateful to my hon. Friend for providing hon. Members and the Government with an opportunity to debate these important issues today.

Aviation (Capital Allowances)

Mr. John Wilkinson: It is a great privilege to introduce this debate on the impact on the long-life assets capital allowance provision on British aviation. The subject may sound arcane, but it is of real concern to business owners and operators of civil aircraft in this country, and to those who manufacture or lease them, or provide equipment for their operation, assembly and maintenance—indeed, to many thousands who earn their livelihoods in the British civil aviation industry, not least my constituents who work at Heathrow airport.
I declare an interest as chairman of a very small aviation consultancy company. However, I assure the House that my desire to raise this topic was driven entirely by the strength of the public interest case against the long-life assets provision and my desire not to see British aviation, which is broadly competitive and successful internationally, hobbled by an impost, the inherent contradictions and negative consequences of which have not been appreciated by those responsible for the formulation of fiscal policy.
Parliament's role is to assist British industry and commerce, not to damage it through imperfect knowledge or lack of intellectual rigour. The origins of this overtly discriminatory and selective tax provision go back to the Finance Act 1996, in which the annual rate of capital allowances on types of plant and machinery with a working life of 25 years or more were cut from 25 to 6 per cent. per annum, with the notable exception of ships and railway assets. The provision applied only to businesses that spend more than £100,000 on such assets in any eligible year with effect from Budget day 1996.
Let me anticipate immediately the Minister's reply: that it was a Conservative measure, that the previous Government are to blame for the consequences and that it is hypocritical of me to demand repeal of the provision by the present Government. Such an attitude denies the possibility of improving legislation by parliamentary scrutiny and of governmental rectification of past errors.
A year and a half has passed since the effective date of the measure, during which representatives of the industry, the Society of British Aerospace Companies, the British Air Transport Association, the Aerodrome Owners Association, the General Aviation Manufacturers and Traders Association, and leasing institutions have come together under that repository of professional excellence, the Royal Aeronautical Society, to present their case against the long-life assets provision in meetings with the Inland Revenue and, most notably, with the Secretary of State for Trade and Industry.
To date, there has been not so much a meeting of minds as a comprehension gap between those who work in the industry and those whose job is to try to make illogical tax legislation workable. Nevertheless, I believe that logic should prevail and the Government should introduce the necessary amendment to rescind that damaging provision in the Committee stage of this year's Finance Bill. In a letter dated 7 April to Mr. Roy McNulty, chairman of

Short Brothers, the Secretary of State for Trade and Industry not only encouraged the industry to continue to talk to the Inland Revenue, but stated:
It also goes without saying that my own officials"—
in the Department of Trade and Industry—
will be pleased to continue to discuss the details of your case with you and your colleagues whenever you wish.
Begotten in distortion and anomaly, the measure was brought forth in inconsistency and illogicality. Indeed, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) claimed in his Budget speech in the House on 26 November 1996 that it would end
unjustifiable distortion in the tax system in favour of particular types of business and investment.
However, he added:
Ships and railways will … be exempt".—[Official Report, 26 November 1996; Vol. 286, c. 166.]
That was a remarkable non-sequitur.
Explaining that groups spending less than £100,000 a year on such assets will be exempt, my right hon. Friend asserted that it meant that the vast majority of small companies would not be affected. In aviation, that is more fantasy than mere traditional Budget hyperbole. A light training aircraft or helicopter, fully equipped, usually costs more than £100,000, so the tiniest aviation business will be affected. A civil airliner costs tens of millions of pounds, so even the smallest airline will be affected in a big way.
Aviation in Britain is already suffering discriminatory taxation in the form of airport passenger tax, from which ferry and Eurostar railway passengers are exempt. The adverse effects of the European Union's proposed abolition of the duty-free concession, which we were discussing with the Financial Secretary only last week, will not be felt by Eurostar, to which it is not extended. It will be felt by airlines and airport operators and, to a lesser extent, by ferry operators. The railways also receive generous state subsidies, which put them in a favoured position.
The present Chief Secretary to the Treasury grasped the central point at issue during the Committee stage of the Finance Bill on 22 January 1997. He said
Aeroplanes are, by definition, very mobile. Unlike power stations or water pipelines, they do not have to be in this country. It has been said—although such threats should be taken with a pinch of salt—that some operators might decamp and set up abroad in order to avoid these provisions and, in a global economy, we must of course be very aware of the tax competition issues that may arise".—[Official Report, 22 January 1997; Vol. 288, c. 979.]
Quite so. Unfavourable tax regimes in Britain in the post-war decades contributed to the mass migration of the British merchant marine to flags of convenience in the Isle of Man, Panama and Liberia—hardly a happy precedent for British civil aviation in such circumstances.
There is no reason why British owners and operators of civil aircraft should remain within the British fiscal jurisdiction. One need not see the expensive graffiti on the tail of a British Airways aeroplane to realise how international and mobile the airline business is. While the British rate of capital allowances was 25 per cent. on non-time-limited assets, we could compete with, for example, Sweden and Denmark's maximum rate of 30 per cent. Italy's 20 to 25 per cent., which sometimes rises, in inimitable Italian style, to eight times that figure, Belgium's 33.3 per cent., France's 25 per cent. And


Germany's rate of up to 25 per cent., to take but six European Union examples. At 6 per cent., it will be very hard for the British to compete. Our rate is way below the global norm in industrialised countries.
A competitive capital allowance rate in the United Kingdom was critical because of the huge subsidies, amounting to hundreds of millions of pounds, disbursed by European Governments to their state carriers, such as Air France, Iberia, Air Portugal, Olympic and Alitalia. We must recognise that long-life aviation assets are not just aircraft. They include the most sophisticated computer-controlled design equipment and machine tools, simulators, air traffic control radars, radio beacons, instrument landing systems—a vast range of items. Revenue officials could be asked to make a judgment, which they are technically not qualified to make, on the life of such assets, which, by virtue of type, utilisation and technical specification, can vary enormously.
An item is a long-life asset if it is reasonable to expect that the machinery or the part will have a useful economic life of at least 25 years. But what is "reasonable"? Are Inland Revenue officials to become prophets? Of 25 main airliner types in the Price Waterhouse and Airclaims report of December 1997, only four had more than 50 per cent. still in service after more than 25 years. The Government have those figures, because they were in a recent submission by the Royal Aeronautical Society to the Secretary of State for Trade and Industry.
Certain consequences are clear. British aviation companies that operate aircraft can move to other EU countries and still serve the United Kingdom market, but from another jurisdiction. Is that what we want to happen? The soundest airlines commercially, which usually have the best safety record, are those with the most modern fleets, such as British Airways, Lufthansa and KLM in Europe, and Singapore Airlines and Cathay Pacific in Asia. The provisions will be a financial disincentive for British airlines to re-equip. We know the dangers of operating geriatric aircraft because of the fatal incidents involving an ALOHA 737 over the Pacific and a United Airlines 747 200, both of which suffered fuselage structural failure. Passengers were sucked into the air in flight. The other recent example is damage to fuel tank wiring found in many high-time 737s following the inspections required after the fatal mid-air explosion of a Trans World Airlines jumbo jet off New York.
An aeroplane's age is not measured in calendar years or in tax years, but in fatigue life and flight cycles. Is the Revenue to measure those? If so, how? Will it carry out an integrity audit on aircraft structures? Will it differentiate between short-haul and long-haul operations on the same type of aircraft, for example Boeing 757s and 767s, which can perform both? What would happen if a carrier interchanged between the two route sectors? It appears that the Revenue will categorise aero-engines as short-life assets, but aircraft are usually bought with engines installed. The value of the power plants is aggregated in the price, although occasionally power can be bought by the hour and individual engines have to be replaced.
The provisions appear to be an incentive to buy an aircraft almost in kit form for assembly by the airline and to claim higher capital allowances on evidently short-life items—not only engines, but tyres, interior seating and furnishings, windscreen wipers and many others. Only the

basic structure can be expected to last 25 years, but even that is over-optimistic: many systems are replaced or upgraded during that time and the value of the aeroplane is written down and, under British aviation accounting practice, depreciated in the books over 10, 12, 15 or 20 years—never over a longer period. To base tax allowances on guesstimates of an item's future life is inherently inequitable. The provisions are wholly inimical not only to small aviation businesses—the tiniest flying school will be affected—but to business aviation and manufacturing.
Even the Government's stated objective of fruitful European industrial co-operation could be prejudiced. There have been repeated arguments in Airbus Industrie about the location for the building of airbus wings, which is currently performed by British Aerospace at Chester. Such manufacturing investment and location decisions in Europe are finely balanced. If Britain will not give the balance of fiscal advantage to the British aircraft industry, the nature of aerospace co-operation will ensure that the work ends up in another partner's country, with a consequent loss of revenue and jobs in Britain.
I hope that the Government will rectify a clearly damaging provision. Since it was introduced, British manufacturing industry has moved officially into recession, but the budget deficit has greatly narrowed, so surely we need greater investment incentives. Fiscally, we can afford them. For employment, commercial and competitive reasons, we should be honest and recognise that the effect of the long-life assets provision is damaging in practice and dangerous in principle, inasmuch as it will institutionalise subjective decision making by the Revenue, as its bulletins on the subject show. Revenue officials are no more technically qualified to take such decisions than aerospace engineers are technically or professionally qualified to comment on fiscal and taxation matters, and why should they be?
There is bound to be much litigation, and aviation business will be lost to this country. If the Financial Secretary does not believe me, she should read the Royal Aeronautical Society paper of November 1997 on the implications for the United Kingdom aviation industry of the fiscal changes of November 1996 to July 1997. It is a brilliant paper of irrefutable logic, and, if she will allow me, I shall hand it to her at the conclusion of the debate. If she read it in its entirety, she could only be convinced that what I have argued is borne out by a full examination of the facts, and that the Government should put the situation right forthwith.

The Financial Secretary to the Treasury (Dawn Primarolo): I congratulate the hon. Member for Ruislip-Northwood (Mr. Wilkinson) on securing this important debate, but he was quite wrong in his forecast of what I would say. I am glad that he pointed out that the measures were introduced by the previous Government: there was a debate on the Floor of the House and many of the points that he raised were covered, although I regret that he was not able to participate.
I share the hon. Gentleman's interest in the aviation industry, beyond my ministerial responsibilities. He will be aware of the importance of the industry to Bristol, for which I am a Member of Parliament. I concede, however, that my knowledge is not as detailed as his—he has


personal experience of the industry. I concur with his points about its importance to the United Kingdom economy and in terms of the development of technology.
I am aware of the United Kingdom aviation industry's concerns about the impact of the long-life assets legislation. The Government have received numerous representations from bodies such as the Royal Aeronautical Society, the British Air Transport Association and the General Aviation Manufacturers and Traders Association.
At the end of the debate, I shall be happy to take the submission offered by the hon. Gentleman. We probably already have it, but, in the spirit of co-operation, I shall respond positively to his suggestion on that matter. I met representatives of the bodies I mentioned in January this year to discuss this matter and I understand that the industry has several distinct areas of concern. These have to be addressed in a logical order.
The first area is the nature of the test to be applied in determining whether the long-life asset rate of 6 per cent. of capital allowance applies. The legislation applies to any asset with an expected useful economic life as an asset of any business of 25 years or more. I listened to the hon. Gentleman's points about the practice of British aircraft companies and how long they would keep an aircraft in operation, but he knows full well that that is not necessarily the end of that aircraft's working life, because the company will sell it on. Therefore, asset life reflects several decisions that the company will make.
Outside the aviation industry, most long-life assets are likely to remain in service in the hands of one owner throughout their economic lives, so the test is easy to apply in most cases. The accounting policy of the business will have to take into account the expected service life of the asset in that particular business; in such cases, the tax treatment will follow whatever accounting treatment is reasonably applied. However, aeroplanes are different: they are likely to be sold in working order and will still have a stretch of useful economic working life after they have left the hands of their first owner. Not only will the expected length of service with the first owner have to be taken into account, but expected subsequent useful life will have to considered.
I entirely accept that the test is a new one imposed by the legislation to which the hon. Gentleman referred, which may create uncertainty and may involve additional costs. However, there is a potential way round those problems of uncertainty and additional compliance costs. The Inland Revenue has been negotiating with

representatives of the industry with a view to arriving at an industrywide agreement that would set out which categories of aircraft should be treated as being within the long-life asset rules and which should continue to receive 25 per cent. allowance as before. The most recent meeting held to discuss that was held on 6 May.
As a first step in those negotiations, the industry submitted a claim, supported by a report examining evidence on existing aircraft lives, that no commercial passenger plane can be reasonably expected to have a useful economic life exceeding 25 years. The Inland Revenue is currently discussing that claim with the industry. If the industry is right—this relates to the hon. Gentleman's point about possible amendments to Finance Bills—and an industrywide agreement is reached that no commercial aircraft come within the long-life asset rules, the long-life assets capital allowance rules will have no effect on the British aviation industry. It is incredibly important that that point is first settled by agreement between the Government and the industry.
However, if it turns out that the industry is wrong and the facts do not support the claim that aircraft are not long-life assets, then, and only then, the aviation industry's other areas of concern, on which the hon. Gentleman has touched today and which have been detailed in submissions to the Inland Revenue and in discussions with me, will come into play.
I do not want to prejudge the issue, but, in recognition of the seriousness of the hon. Gentleman's points and my own keen interest in the subject, I have asked the Inland Revenue to press on with its negotiations with the industry to establish whether aircraft do come within the long-life asset rules. Only when we have an answer to the questions whether aircraft are long-life assets and, if so, how many are involved will we be able to gauge the real impact of these provisions on the aviation industry and deal with the other issues raised by the industry.
I assure the hon. Gentleman that, although the rules were inherited from the previous Government and were passed without criticism from Conservative Members at the time, the matter is one which we take seriously. We are pursuing it actively with the industry to ensure a satisfactory conclusion. If, at a later stage, the hon. Gentleman wishes to pursue the matter in correspondence with me, I shall be happy to respond as positively as I can and keep him informed of developments.

It being before Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Oral Answers to Questions — NORTHERN IRELAND

The Secretary of State was asked—

Killyleagh Yarns

Mr. John D. Taylor: When she was advised by Killyleagh Yarns that it had financial difficulties; when the Industrial Development Board offered a rescue package to Killyleagh Yarns; when she was told of the decision to close the factory in Killyleagh; and what proposals she has made to attract new jobs to Killyleagh. [40679]

The Minister of State, Northern Ireland Office (Mr. Adam Ingram): Herdmans, the company that owns Killyleagh Yarns, has kept the Industrial Development Board informed of the developing international market conditions that led to the decision on 27 April to announce the closure of Killyleagh and Mossley mills. No financial rescue package was offered to the company, as it was considered that that would not have stopped or averted the closure decision. Killyleagh will continue to be marketed as a suitable location for new IDB investment opportunities when they arise.

Mr. Taylor: Over the past 10 days, I have been to Killyleagh twice. As the Minister will appreciate, the village and its people are devastated by the decision. It is a rural village in the southern part of County Down, although it is in the Strangford constituency.
Will the Minister confirm that the closure took place without any prior consultation with trade unions? Will he also confirm that his Department will make every effort to claw back any grants that are due to it for plant and equipment provided for the factory? Will he further confirm that he will make every effort—on the international scene and through the IDB—to attract another company to the premises in Killyleagh, as the present owners are obviously making no effort whatever?

Mr. Ingram: Of course we recognise the impact of the closure on Killyleagh and the surrounding area. It is an important employer, and the loss of any employer of that size clearly has an impact on such a community. Consultation with trade unions is a matter for the company, but I suggest to the company that it is important to consult the work force and the unions. As for grant clawback, if there has been any breach of conditions relating to support given to the company in relation to the closure, we will consider it.
The right hon. Gentleman's last question—an important question—concerned how we would continue to market the area, and try to attract new investment. The initiative announced by the Chancellor yesterday begins the search for new ways to encourage growth in the Northern Ireland economy. If we achieve the right result on 22 May, peace and prosperity can go hand in hand, as the Chancellor said. I am sure that that will offer the best future for areas such as Killyleagh.

Peace Process

Mr. Bill O'Brien: If she will make a statement on the contribution of the European Community to an outcome in the peace negotiations in Northern Ireland. [40680]

Mr. David Hanson: What discussions she is having with the European Union with regard to measures to assist the peace process. [40689]

The Secretary of State for Northern Ireland (Marjorie Mowlam): The European Union played an essential part in the process that led to the agreement on Good Friday. More than £1.3 billion has been given to Northern Ireland from the structural funds, the International Fund for Ireland and the peace and reconciliation programme, allowing 10,000 community groups across the divide to build confidence and trust between them.

Mr. O'Brien: I thank my right hon. Friend for that reply, and join her in thanking the EU for its contribution to the development of peace and prosperity in Northern Ireland. Does she share my view that a substantial number of people in the EU—as in the United Kingdom—want a substantial yes vote in the referendum that will be held in the very near future? Will she tell us a little more about how the EU can develop the prosperity of Northern Ireland, and the peace accord?

Marjorie Mowlam: I join my hon. Friend in acknowledging European support, and I hope and believe that there is a chance for a peaceful future for the people of Northern Ireland and the island of Ireland.
I could go into great detail about the EU's impact, but I will choose just two examples. The money has been given via district partnerships, of which there are 26 in Northern Ireland. Political parties, community groups, trade unions and businesses from both sides of the political divide have sat down to allocate that money, which has proved an important confidence-building measure.
Good examples of how the money has been used are the sort of groups that were represented this morning at the launch of Sir Kenneth Bloomfield's report on victims, entitled "We Will Remember Them". Several such groups, such as WAVE and Lifeline, have been funded by the European Union.

Mr. William Ross: We are grateful for the sums received from the Common Market, especially the money spent at grass-roots level. We are equally grateful for the expenditure announced by the Chancellor yesterday. But does the Secretary of State also recall that agriculture, the most important industry in Northern Ireland, is suffering grievously from the high value of the pound and the lack of movement on the green pound issue? May we shortly expect an announcement to resolve some of agriculture's financial difficulties?

Marjorie Mowlam: I thank the hon. Gentleman for acknowledging the importance and value of the Chancellor's package, which has been six to eight months in the making. It includes an acknowledgement of the


need to help the beef industry in Northern Ireland—£2 million for the marketing of beef—in the hope that, when the Commission's report and conclusions are eventually published, this crucial market for Northern Ireland can be restored.

Mr. Hanson: Does my right hon. Friend agree that the European Union is in a unique position to support the efforts of the British and Irish Governments to maintain and develop the peace process? Can she give us any details of how the latest 100 mecu announced by the EU will be used in 1999 to support the peace process after the referendum?

Marjorie Mowlam: The 100 mecu which President Santer announced on a recent visit is a welcome and important package—although it is still going through the European Parliament, so nothing is definite yet. The groups funded by the EU are considering how to make community groups sustainable without being dependent on external resources, if the money does not continue to flow in ad infinitum.

Mr. Michael Fabricant: I welcome the EU's financial contribution, which is much needed, but will the right hon. Lady also acknowledge that it is the unique position of the United States of America, which shares a common language, heritage and understanding of the English legal system, that put it in a position to co-chair the peace talks?

Marjorie Mowlam: It is important to acknowledge the significance both of America and the EU—it does not help to play one off against the other. Both have helped tremendously, in terms of markets, investment and direct financial help, to build communities and communication from the bottom up.

Human Rights

Fiona Mactaggart: If she will make a statement on the impact of the Belfast agreement on the Government's policy towards human rights. [40681]

Mr. Steve McCabe: If she will make a statement on the impact of the Belfast settlement on the Government's human rights policy. [40683]

The Minister of State, Northern Ireland Office (Mr. Paul Murphy): The Belfast agreement will enhance the Government's existing commitment to the human rights agenda. In particular, the agreement proposes the establishment of a human rights commission with significant new powers which will extend and enhance the role of the Standing Advisory Commission on Human Rights.

Fiona Mactaggart: I thank the Minister for that reply. I particularly welcome the human rights commission—its job description is set out in the agreement—which is to be a powerful body. However, in all international human rights legislation, the most fundamental human right is the right to life. What action to protect the rights of victims will follow on from today's report?

Mr. Murphy: I thank my hon. Friend for that question. The settlement acknowledged and addressed the

sufferings of victims of violence as a necessary element for reconciliation in Northern Ireland, and I pay tribute to Sir Kenneth Bloomfield and to his assistant, Mary Butcher, for producing a moving and thought-provoking report. The Government have set aside some £5 million as a down payment to support practical work among victims, but, as the settlement says, the achievement of peace and a just society would be the best memorial to the victims of violence.

Mr. McCabe: Does my hon. Friend agree that the measures and safeguards on human rights that are outlined in the Belfast agreement are crucial for both traditions in Northern Ireland? How does he hope to take those measures forward following the referendum?

Mr. Murphy: I am grateful to my hon. Friend. The establishment of a human rights commission, an equality commission and a Bill of Rights are all set out in the agreement. They are there to give due respect to the identity and ethos of all communities in Northern Ireland and to pursue parity of esteem. It is right to do that in any event, but it is particularly important as it is an essential part of the settlement. I foresee that the New Northern Ireland Assembly will have a department of equality; it will certainly address these important issues. Like my hon. Friends, I believe that there will be a resounding yes vote for such an assembly in the referendum next week.

Rev. Martin Smyth: The Minister will be aware that, in 1975, Northern Ireland, through its assembly, recommended a Bill of human rights, saying that, if it was not introduced in this House, a forthcoming Northern Ireland assembly would do so. However, does the hon. Gentleman accept that there is a tendency today to elevate desires and wishes for rights, as long as someone else pays for them? Is there not a need to have rights and responsibilities?

Mr. Murphy: I entirely agree that rights should be matched with responsibilities, but I am sure that the hon. Gentleman will agree that one of the great problems that we have faced in Northern Ireland over the years is precisely that human rights have been in considerable difficulty; it has been a great cause of concern among both communities over many years. I am sure that he will also agree that perhaps the best answer is that the people of Northern Ireland themselves, through their elected politicians, as well as us in the House of Commons, will be able to address the matter in the years ahead.

Kate Hoey: In welcoming the mention of human rights in the Stormont agreement, I wonder whether the Minister agrees that one of the great abuses of human rights, which is still going on, is the number of punishment beatings, mutilations and appalling atrocities carried out by paramilitaries on both sides? Does he agree that the paramilitaries' outspoken condemnation of such behaviour will be a mark of whether the settlement will really work, and that that is the only way in which we will see a decent society in Northern Ireland?

Mr. Murphy: I agree with my hon. Friend. The Government completely condemn and abhor all so-called punishment beatings and shootings. In a peaceful and democratic society, there is no place for such atrocities.


Only this morning, my right hon. Friend the Secretary of State for Northern Ireland said that the victims commission would look at that very important aspect of human rights in Northern Ireland.

Mr. Andrew MacKay: I warmly welcome Sir Kenneth Bloomfield's excellent report into victims and entirely endorse what the Minister said about the power that we must give to the human rights of victims, but will he give the House an assurance that there will be no repetition of the charade at the weekend when convicted IRA murderers were wrongly allowed out to prance around at Sinn Fein's conference, which was merely a propaganda exercise? I deeply regret the fact that that will harm the yes vote that he and I desperately want from the Province on Friday week.

Mr. Murphy: The hon. Gentleman is right to say that he and I share the common aspiration of ensuring that there is a successful yes outcome in the referendum next week. I am sure that he also agrees that all triumphalism is to be condemned, whether it is the sort we saw last week or anything else.
On the hon. Gentleman's point about letting out prisoners, he knows that that also occurred under the Conservative Government and previous Governments. It is an integral part of the agreement. However, I accept that it is important that people understand that it is not helpful to the settlement to have triumphalism in any shape or form.

Mr. MacKay: With great respect to the Minister, although he and I may agree that, at times, there may be humanitarian reasons for letting out prisoners under strict supervision—for example, to attend funerals or to see a seriously ill member of their family—there is no excuse for letting out prisoners to go to a party conference as a propaganda exercise. Will he assure us that that will never happen again?

Mr. Murphy: I envisage no circumstances in which that would happen again, because I hope that there would be no need for it. What I want in Northern Ireland—in common with everyone in the House—is a peaceful society based on political stability. The only way in which we can achieve that is to vote next week, in overwhelming numbers, in favour of the agreement that was made by all the parties sitting in Belfast on Good Friday.

Mr. Harry Barnes: Is not the basic human right on which all human rights are based the right to vote? Was not the hon. and learned Member for North Down (Mr. McCartney) correct in 1996 when he said, and I paraphrase, that, if a referendum were agreed by all the people of the island, it would have unique constitutional and moral authority and, most of all, enable the republican movement to renounce force without diminishing its political goal? If that was correct in 1996 and correct today, is it not a pity that the hon. and learned Gentleman no longer supports that position?

Mr. Murphy: I obviously regret the position taken by the hon. and learned Member for North Down, but hon. Members must make up their own minds on how they vote and what they support in the coming referendum. I believe that everyone in Northern Ireland wants a

society based on the principles of non-violence and democracy, and the only way to achieve that is by supporting the agreement in the coming referendum.

Unemployment

Mr. Roy Beggs: If she will make a statement on the present level of unemployment in Northern Ireland. [40682]

The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Tony Worthington): There has been a decrease of 4,000 in the number of unemployed over the year and the current unemployment rate is 8 per cent. I know that the hon. Gentleman will want to welcome my right hon. Friend the Chancellor's package of £315 million, which is an investment in jobs and in prosperity. It means £200 for every man, woman and child in Northern Ireland.
I know that the hon. Gentleman has especially welcomed the money spent on the improvement of the Larne to Belfast route, for which he has campaigned over the years. It is an important instalment in our investment in jobs and prosperity for Northern Ireland.

Mr. Beggs: I thank the Minister for his reply, and welcome the continuing fall in unemployment. The Chancellor's announcement should contribute to further economic growth and prosperity in Northern Ireland.
Does the hon. Gentleman agree that the measures put in place by the Government to raise school standards and skill levels and to encourage the young, the unemployed and the disabled to become equipped for employment, together with the investment that they have made in life-long learning, will be successful only if the disadvantaged take the opportunities now available to them fully to realise their own potential?

Mr. Worthington: We believe that the right way to achieve growth and prosperity is to ensure that the peace process works. My right hon. Friend the Chancellor is backing that, and we want every hon. Member to back it. If we use the springboard of my right hon. Friend's package and ally it to a positive vote in the referendum next week, the prospects for Northern Ireland will be very good indeed.

Mrs. Gwyneth Dunwoody: On the subject of unemployment, is my hon. Friend aware that it is important not to lose existing jobs? Will he therefore confirm that the Coastguard agency is concerned that the search and rescue service, currently carried out by helicopters from Aldergrove, will not lose jobs after the agreement or be subjected to different terms and conditions, as that would not be acceptable to the service?

Mr. Worthington: I shall bring the matter to the attention of Lord Dubs, who is responsible for it. I know that my hon. Friend will want to welcome the investment in roads and other infrastructure—such as the Larne road, the Toome bypass, the Westlink and Fermanagh airport—all of which are creating, and will create, valuable new jobs.

Mr. Eddie McGrady: May I place on record the thanks of the people of Northern Ireland for


the Chancellor's £315 million package, which I hope will go a long towards alleviating unemployment? May I draw the Minister's attention to the fact that, in 1997, the Chancellor announced the creation of 5,000 jobs—few, if any, of which came to south-east Ulster? Many of the targets set in the Chancellor's recent statement will affect only the Greater Belfast area and north-west Ulster.
I therefore urge that new financial enhancement initiatives be created for south-east Ulster, such as that described in the answer on Killyleagh—which is in south-east Ulster—to the right hon. Member for Strangford (Mr. Taylor) by the Minister of State, the hon. Member for East Kilbride (Mr. Ingram). Special incentives are required to encourage relocation to and inward investment in the area.

Mr. Worthington: I draw the hon. Gentleman's attention to the Belfast-Newry road, which cost £15 million and will be of considerable assistance to the area. I should also mention the fact that about £65 million will be invested in skills and in people in Northern Ireland. That investment will go into south-east Ulster, as it will go into every area of Ulster.

Royal Ulster Constabulary

Mr. John Wilkinson: If she will publish the terms of reference for the review of the Royal Ulster Constabulary. [40684]

The Minister of State, Northern Ireland Office (Mr. Adam Ingram): The terms of reference for the independent commission on policing are given at annexe A to the Belfast agreement, a copy of which is available in the Library of the House. The independent commission offers a sensible, informed way of examining an extremely important issue.

Mr. Wilkinson: Will the hon. Gentleman, on behalf of the Government, give a clear and unequivocal pledge that, during the life of this Administration, no individual who has a record of conviction for any terrorist offence will be admitted to serve in the Royal Ulster Constabulary?

Mr. Ingram: Yes.

Mr. Phil Willis: One of the results of the peace process—which I hope will be concluded successfully—will be a very significant reduction in the number of RUC officers. Does the Minister agree that many of those officers have served the Province, at great personal expense, exceedingly well? What action is the Minister and the Northern Ireland Office taking to make proper transitional arrangements ensuring that those officers, as they move out of the RUC, are properly resettled?

Mr. Ingram: That is a complex matter, which is predicated on an assumption with which I do not necessarily agree—that there will be an early downsizing or reduction in the RUC force. Any likely reduction will be phased, and based on an assessment of the threat level at a particular time. Last week, the Prime Minister announced £4.5 million for a rehabilitation and training

trust, which was the beginning of a package of measures targeted on the RUC to deal with the very issues raised by the hon. Gentleman.

Mr. Jeffrey Donaldson: The Minister will be aware of the formation last week of a new terrorist organisation, called the Real IRA. Is he aware of the significant defections from the Provisional IRA—including, last week, three senior members of the Provisional IRA, one of whom is an experienced bomb maker? Given that continuing threat of violence—as the people of Northern Ireland continue to need the protection of the Royal Ulster Constabulary against the men of violence—does he agree that it would be foolish to tamper with the RUC in the proposed manner, to inhibit the RUC's anti-terrorism role or to undermine the RUC's morale?

Mr. Ingram: The threat level is still high. There is still a very significant security threat within Northern Ireland, which is recognised not only by all right hon. and hon. Members but, more important, by the people of Northern Ireland, who have to face that threat. Those who daily face the threat—the men and woman who serve in the RUC and put their lives at risk to protect the rule of law—also have to be afforded our protection. I give an absolute assurance and guarantee to the hon. Gentleman that there will be no tampering with the RUC while that threat level remains.

Mr. Malcolm Moss: What are the Government doing to prevent any further erosion of the morale of serving RUC officers? Will the Minister assure the House that, whatever the outcome of the deliberations of the commission, there is no place in the United Kingdom for sectarian community policing or two-tier policing?

Mr. Ingram: I have already answered the last part of the hon. Gentleman's question in my response to the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who asked a similar question. We are dealing with morale in the RUC, which is why we are addressing directly the issue of rehabilitation and training and why we have already announced a package of measures in that connection. Of course, we are in close discussion with the Police Federation and the Superintendents Association to consider how a fundamental review, for which the Chief Constable has responsibility, could be implemented at some point in the future. We are in close consultation with representatives of the RUC, and that will continue.

Prisoners (Release)

Mr. Geoffrey Clifton-Brown: If she will make a statement on the conditions contained in the Belfast agreement concerning the release of prisoners convicted of terrorist offences on licence. [40686]

8. Mr. Andrew Hunter: If she will make a statement on the Belfast agreement's provisions for the release of prisoners. [40687]

The Secretary of State for Northern Ireland (Marjorie Mowlam): I referred in my statement to the House on 20 April on the Belfast agreement to the


accelerated releases which were part of that overall package. The release of prisoners will be considered on a case-by-case basis by an independent body. It is not a general amnesty. Prisoners will be released on licence and recalled to prison if they support an organisation engaged in terrorism or if they engage in terrorism themselves. Prisoners affiliated to groups that continue to engage in terrorism will not be given early release; nor will those who are considered to be a serious risk to the public. We consider those to be crucial safeguards.

Mr. Clifton-Brown: Given that some of these prisoners who might be released on licence still might have a significant proportion of their sentences for serious terrorist offences to serve, does not the Secretary of State think that it is wholly necessary—indeed, that it should be a precondition—that the authorities do everything they possibly can to ensure that these prisoners have genuinely renounced violence and any organisation to which they belong that espouses violence?

Marjorie Mowlam: I have no difficulty agreeing with the hon. Gentleman. Prisoners have to have renounced violence and anything else that is not part of a democratic, constitutional way forward. They will not be released unless that has happened. They will be released on licence and can be recalled—they are the crucial safeguards which show that there is a commitment to a peaceful way forward.

Mr. Hunter: What does the right hon. Lady regard as the moral justification for early release? Surely it undermines the rule of law and amounts to capitulation to the threat of terror. How can lasting peace and political stability emerge from an agreement which in part relies on murderers to act as its ambassadors?

Marjorie Mowlam: I accept that lasting peace is what we are looking for. Equally, I accept that it is a difficult, complex problem. As I said in answer to the previous question, it is part of an overall agreement. I know that the hon. Gentleman understands that more than most. He, too, has been to the Maze and talked to prisoners. He, too, put forward schemes a couple of years ago, saying that we should look at the early release of prisoners who are members of organisations maintaining a credible ceasefire. I hope that he understands that it is not easy. Others have tried: when the previous Government examined this issue, they changed the remission system, and they had 240 prisoners out before we took over government.
In addition, if the present scheme continued, without our introducing any change to the previous Government's scheme, half the prisoners would be out in two years anyway. These schemes were not changed during the Canary Wharf breakdown or during the breakdown of the ceasefire.

Mr. Kevin McNamara: Is my right hon. Friend aware that we all appreciate the pain felt by members of both communities at the prospect of the release of prisoners? We also realise the important part that prisoners from both communities play in seeking to achieve peace and in the Belfast agreement. It must be recognised that, painful though it is, it is necessary and

proper in respect of reaching agreement, and that the terms and conditions set out by my right hon. Friend will properly and effectively achieve equity for all concerned.

Marjorie Mowlam: There is no doubt among hon. Members, many of whom have friends who have suffered at the hands of terrorism in Northern Ireland on both sides of the divide. I spent this morning with the families of victims who had been killed or injured. No one can underplay the pain and suffering of those families. As I said in the House on 20 April, it is not an easy part of the package or of the Good Friday agreement, but, on balance, the political parties of Northern Ireland have signed up to it.

Oral Answers to Questions — PRIME MINISTER

The Prime Minister was asked—

Irish Referendums

Dr. Norman A. Godman: When he last met the Taoiseach to discuss matters relating to the referendums being conducted in Northern Ireland and the Irish Republic.

The Prime Minister (Mr. Tony Blair): The Taoiseach and I last met on 2 May. Obviously, we speak regularly on the phone. We fully agree that the Good Friday agreement represents new hope and, indeed, the only way forward for the people of Northern Ireland.

Dr. Godman: May I offer my sincere compliments to my right hon. Friend the Prime Minister and to the right hon. Member for Huntingdon (Mr. Major) for their remarkably successful visit to Northern Ireland last Wednesday in support of the yes campaign? I am confident that my right hon. Friend will continue to support the courageous stance of the right hon. Member for Upper Bann (Mr. Trimble). Will he give an assurance that the suffering and pain of all the victims of the troubles will be acknowledged and addressed by the Government? He will know of the moving testimonies that we heard this morning in response to the Bloomfield report. Northern Ireland needs a resounding yes vote next week, but the victims of the suffering need an assurance from the Prime Minister this afternoon, and that is what I seek from my right hon. Friend.

The Prime Minister: I thank my hon. Friend for all his work over a long period. I am happy to join him in thanking the right hon. Member for Huntingdon (Mr. Major) for coming with me to Northern Ireland last week. I also thank the other political parties for their support and help. I warmly welcome Sir Kenneth Bloomfield's report and his 20 recommendations on acknowledging the suffering of victims of violence. We have already made it clear that Government funding of some £5 million is available to take effective action on the report. The victims of violence have suffered enormously. We do not forget their suffering. I believe that the peace agreement provides the best way forward to ensure that there are not more victims in future.

Mr. David Trimble: The Prime Minister will know that the recent behaviour of Sinn Fein-IRA has


increased concern in Northern Ireland that it will take the benefit of inclusion in the assembly and prisoner release without accepting the matching obligations to show by its actions, including decommissioning, that there is a genuine peace. Will he make it clear that those obligations, which are clearly set out in the agreement, will be made effective and reflected in forthcoming legislation?

The Prime Minister: Yes—I intend to make it clear that the commitment and the obligations in the agreement must all be fulfilled and that no one can choose to fulfil some parts of the agreement and not others. Especially after the events at the weekend, it must be clear and demonstrated, as the right hon. Gentleman has pressed me on many occasions to make clear, that if people are to take their places on the Northern Ireland Executive and participate in the provisions on prisoner release, we must be sure that violence is given up for good. We must demonstrate that clearly.

Mr. William Hague: I echo the words of the right hon. Member for Upper Bann (Mr. Trimble). Like the Prime Minister, we are anxious to achieve a substantial yes vote in the referendum next week and we continue to join him in doing everything possible to bring that about. Does the right hon. Gentleman agree that that is not made easier by the release of hardened IRA murderers to strut around at the Sinn Fein conference at the weekend? Will he ensure that there will no further episodes of that kind?

The Prime Minister: My right hon. Friend the Secretary of State for Northern Ireland has already made that clear. I entirely agree with the comments that have been made by many people, not least the Irish Taoiseach, who said that he totally condemned the triumphalism that we saw on our television screens. However, I still believe that the agreement is the right way forward, and I am grateful for the right hon. Gentleman's support. Let me make it clear that the agreement must be taken as a whole; it is one package—it cannot be divided up—and all the provisions must be met in full.

Engagements

Mr. Nick Hawkins: If he will list his official engagements for Wednesday 13 May.

The Prime Minister: This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Mr. Hawkins: The Prime Minister spent over an hour in the House last week explaining the problems of the European summit by saying that Mr. Duisenberg had intended the result of the agreement that was reached. What is his reaction to the fact that, later last week, Mr. Duisenberg gave a completely different version of events?

The Prime Minister: I shall settle one matter once and for all: I am told that it is pronounced "Doysenberg", although I am well aware that I added somewhat to the confusion in my answers last week.
Mr. Duisenberg has not given a version different from mine. The position is precisely as I set it out last week. He has said that he intends to go early, but that he is not obliged to do so. That is the point of principle that meant that the discussions continued for 10 or 11 more hours. We made it clear that that point had to be agreed, and it has been agreed. I remind the hon. Gentleman that Conservative Members were saying that the deal would wreck the stability of the financial markets. As in so many other matters, they have been proved completely wrong.

Mr. David Crausby: The new deal is clearly a tremendous opportunity for unemployed young people, but it must not be allowed to become a substitute for apprenticeships. Will my right hon. Friend assure me that the funding that is available for training apprentices and school-leaving trainees will not be adversely affected by the new deal?

The Prime Minister: It will not be adversely affected. I am happy to tell my hon. Friend and the House that, as a result of the provisions, the number of people on modern apprenticeships is up to more than 100,000, which is an increase of more than 50 per cent. since last year. The new national traineeships that we are implementing and the new deal will mean that, over the next few years, hundreds of thousands of young people will be given their first chance to get high-quality skills, high-quality education and a decent job.

Mr. William Hague: Has not the spectacle of the past week at the Foreign Office been yet another shambles presided over by the Foreign Secretary? Now that the Prime Minister has had a couple of days to reflect, does he agree that Foreign Office officials knowing of a possible breach of a UN arms embargo and not informing the Foreign Secretary for seven weeks is more than just "overblown hoo-hah"?

The Prime Minister: No is the answer to both those questions. There may have been a lot of hype in the media and on the Opposition Benches, but we have the matter fully in perspective.

Mr. Hague: The Prime Minister calls it "a lot of hype". A UN arms embargo sponsored by this Government has apparently been broken by a British company. A Minister has misled a Select Committee of the House of Commons. A Minister did not ensure that he had the facts before he took part in a House of Commons debate. The Prime Minister does not think that that is important because he has nothing but contempt for the House of Commons. He hardly ever comes to the House of Commons—except on Wednesday afternoons. What instructions has the Prime Minister given the Foreign Secretary to ensure that he gets a grip on his Department and does not repeat the fiasco?

The Prime Minister: I should point out one little fact to the right hon. Gentleman. I have made more statements in the House than my predecessor did in the year before the election—and answered more questions.
I think that I have finally discovered why the Tory party is so upset. We are accused of having helped a democratically elected regime. That is the Tories' problem. When it comes to gun running to Iraq, they are


all right. I do not regret a single word that I have said about this. I described it as overblown hoo-hah and that is what it is.

Mr. Hague: It seems that the Prime Minister has given no new instructions to the Foreign Secretary and that he has taken no action about what happens in the Foreign Office. We know that, in this Foreign Office, telegrams go missing even while the Foreign Secretary is appearing on the BBC 2 documentary "How to be a Foreign Secretary", in which he said:
I have recognised that you can be a successful Foreign Secretary if you focus on the big questions and not necessarily … finish the paperwork.
Is not it time that the Prime Minister gave the Foreign Secretary some new instructions about the running of his Department? Should not we have an inquiry—held in public, not behind closed doors—so that we can all see how the Foreign Office is run?

The Prime Minister: Absolutely not is the answer. The Foreign Secretary does not require lessons on how to be the Foreign Secretary. It is the Leader of the Opposition who requires lessons—on how to be Leader of the Opposition. If he is really good to me, I might tell him—but I doubt he would learn.

Mr. Hague: No one will be impressed by the extraordinary complacency of a Prime Minister who takes no action on the Foreign Office and who has refused in the past few moments to hold a public inquiry. Is not the Foreign Office being run like a Dad's Army outfit, by a Foreign Secretary who combines the pompousness of Captain Mainwaring, the incompetence of Private Pike and the calm of Corporal Jones? Now that the Foreign Secretary has blundered in and out of the middle east peace process, offended the entire Indian sub-continent and been called two-faced by an heroic Chinese human rights activist, should not even the Prime Minister conclude that Britain deserves a better Foreign Secretary?

The Prime Minister: As I said a couple of days ago and as I said in the House last week, if people have deliberately breached the UN arms embargo, that is wrong. The policy on which I expected the Foreign Office to have focused over the past few months was one of restoring a democratically elected regime in Sierra Leone over a military junta that was put there by a coup d'état. I find it remarkable that, in a week that has seen a really important and difficult foreign affairs issue—nuclear testing by India—riots in Indonesia and problems in Kosovo, the right hon. Gentleman gets up and asks what might impress a sixth-form debating society but does not impress me.

Dr. Alan Whitehead: Does the Prime Minister share the sinking feeling that I had on reading the Rail Regulator's latest report, with its catalogue of fines for lateness and short trains—including a massive £405,000 fine on South West Trains, my local rail operator? Does he share my anger that that is still happening despite all the promises that the Conservative party made at the time of privatisation? Will he assure me that he is working towards a better system of rail regulation through the strategic passenger authority, which I believe is forthcoming?

The Prime Minister: We warned the previous Government that the way in which they were privatising

the public railways would end up in precisely the present situation, with many people feeling that their services have deteriorated although their fares have gone up. However, I am pleased to be able to tell my hon. Friend that help is on the way. The forthcoming transport White Paper will address those issues specifically and ensure that the regulatory flaws that we inherited from the previous regime are corrected.

Mr. Paddy Ashdown: One might ask who sold the Indonesians the water cannons. [HON. MEMBERS: "They did."] Yes, Labour did; that was their ethical foreign policy. As for Sandline, is it not clear that the Government have now settled on what might be termed the Thomas à Becket defence—"We wanted that to happen but we specifically did not ask for it to happen"? In foreign affairs, one has from time to time to do good things by less than perfect means, but was it not rather cack-handed of the Government to hope for covert action in support of President Kabbah while passing legislation to make that illegal in Britain, and at the same time pretending that the whole thing was part of an ethical foreign policy?

The Prime Minister: No. Let me again make it clear for the right hon. Gentleman. There should be no breach—no deliberate breach—of the UN arms embargo. That should not happen in any set of circumstances; neither have we ever sought to say that it should. However, what is absurd about the situation is the fact that the context in which help was being provided was one in which we were deliberately, as a matter of policy, giving every help that we could to the democratically elected regime. Of course that should happen, within the law. All that I can say is that so far we have had allegations that the law has been broken, but no proof or evidence.

Mr. Ashdown: Can the Prime Minister and I at least agree on this: despite his sincere intention to do things differently, on this occasion his Government have become the second Government to be entangled in a controversy about illegal arms? The conclusion is simple: the systems are wrong, even if the intentions are not. It is time that we started to institute a more effective mechanism for the scrutiny of arms sales. May I make two propositions? The first is that we should establish a public register of arms brokers and arms sales so that we can see who sells what to whom; the second is that we should establish a proper system of parliamentary oversight and scrutiny of the whole matter.

The Prime Minister: I simply dispute the premise of the right hon. Gentleman's questions, which is that we knew what was happening but let it go on because the ends justified the means. We have never said that, and that is not the case. There is no shred of evidence in anything that I have seen that Ministers connived at such a policy. We all know what has actually happened here. Perhaps I should say something candidly to our friends and colleagues in the media. They have had six days of this matter rolling round the news schedules and on the front pages of all the newspapers. That is their prerogative, those are their priorities, but what is the priority for the Government is my priority and my prerogative. The fact that they decide that something is of huge importance does not mean that it is.

Mr. Phil Woolas: Does my right hon. Friend agree that the clothing and textile industry is vital to many communities, including my constituency, and is important to our national economy? Is he aware that the all-party parliamentary group on clothing and textiles has recently been re-established, with support from all parts of the House, with a strong membership and with a free subscription? Does he agree that the many clothing and textile companies that depend on exports in one of the most fiercely competitive markets in manufacturing require above all else a stable currency in which to succeed?

The Prime Minister: I agree with my hon. Friend and congratulate him on the work he has done to establish the all-party group on clothing and textiles. The textiles industry is one of the largest manufacturing sectors in the United Kingdom, with sales of more than £17 billion. We are putting in place a strategy that will help companies operating in that sector and others, not least by cutting corporation tax to its lowest level ever, by improving the tax system for small businesses, by investing more in skills and education and by ensuring that we do not return to the boom and bust years of the Conservatives.

Mr. Gerald Howarth: How can the Prime Minister claim credit for the outcome in Sierra Leone when he says that he did nothing to bring it about?

The Prime Minister: I am not saying that we did nothing: we did a great deal to bring it about. We sent HMS Cornwall down there on a humanitarian aid mission and we appointed a special representative to help President Kabbah. We have helped Sierra Leone with aid and with money for schools, hospitals and transport. What we have not done is help Sierra Leone with arms. That is the difference. At some point, Opposition Members might wake up and understand the difference between helping a democratically elected regime properly and helping improperly. I know that they will not understand the difference, but we do.

Ms Gisela Stuart: Today, President Clinton is in Berlin to mark the 50th anniversary of what was undoubtedly the greatest victory by the west and the allies in the post-war period: the breaking of the Berlin blockade. Can my right hon. Friend tell the House how the Government will honour those RAF service men and women who played a vital role in breaking that blockade? How will we pay tribute to that selfless campaign?

The Prime Minister: My right hon. Friend the Secretary of State for Defence will attend the allied museum opening ceremony in Berlin with his French and American counterparts. The Queen's Colour Squadron, RAF aircraft and bands will participate in various events planned for the coming months to commemorate the 50th anniversary of the airlift. In addition, I understand that the Department of Trade and Industry, the Ministry of Defence and the Post Office are actively discussing issuing a set of commemorative stamps. We shall play a full part in those celebrations, which are rightly being held around the world.

Mr. Geoffrey Clifton-Brown: How can the Prime Minister spend an hour in the House last week arrogantly trying to convince hon. Members that the whole Sierra Leone incident was nothing but hoo-hah when he knows perfectly well that Her Majesty's Customs and Excise is conducting a serious inquiry involving criminal charges relating to Sierra Leone?

The Prime Minister: Customs and Excise is conducting an investigation into whether a company has breached a particular order. That investigation must take its course—no one has ever suggested anything different—but I am afraid that I do not share the view held by the hon. Gentleman and his right hon. and hon. Friends that there is evidence that Ministers have engaged in some great conspiracy to run arms to Sierra Leone. There is no such evidence.

Mr. David Winnick: Is my right hon. Friend aware that my constituent, Stephen Long, was held for a number of years by the Japanese and treated in a cruel and degrading manner in defiance of all the conventions regarding prisoners of war? Is it asking too much for the present Japanese authorities—perhaps through the emperor—to make a full apology for the terrible treatment of allied prisoners of war by the Japanese? I am far from being anti-Japanese or anti-German—I have no reason to be—but if successive post-war German Governments have apologised for what the Nazis did, why can the Japanese not apologise also? Why should they not do that very quickly so that people such as my constituent can hear that apology in their lifetimes?

The Prime Minister: Of course I sympathise with the sentiments behind by hon. Friend's question. He will know of the words spoken and written by the Japanese Prime Minister a short time ago. We must never—and will never—forget, or indeed forgive, the suffering of those people. We in no way diminish our respect for their suffering by saying that we are pleased that today we have a new and different relationship with modern Japan. We shall continue to remember them because they deserve to be remembered.

Mr. David Prior: Does the Prime Minister believe that, over the past year, our relationships with India, the middle east and west Africa have been handled by the Foreign Secretary with great distinction?

The Prime Minister: Yes.

Ms Jenny Jones: This week, the Indian Government resumed nuclear testing. Furthermore, the tests took place in a particularly politically sensitive area of the sub-continent. Will my right hon. Friend use the United Kingdom presidency of the European Union and his influence with other world powers to ensure that the condemnation of the Indian Government is worldwide?

The Prime Minister: We have already expressed our deep concern at the nuclear tests carried out by the Indian Government—today, we called in India's ambassador to express that concern directly to him. It is extremely


important that we ensure that the non-proliferation treaty is sustained. We urge restraint by surrounding countries, particularly Pakistan. The nuclear tests are deeply disturbing; they inevitably diminish our chances of producing the safe world in which we all want to live.

Sir David Madel: Yesterday, leaders of the Edison project said that the Government had assured them that a company could run an education action zone for profit, yet the National Union of Teachers has said that it has had a commitment that that will not be allowed. Which of them is right?

The Prime Minister: As I understand it, companies will be allowed to participate in the education action zones and to make a profit if they are successful. If companies are involved in education action zones—I suspect that this may be the reason for the difference between the two positions—they must abide by the rules on the way in which schools and education authorities are run. Moreover, zones are run under the aegis of the education authority, so although nothing disturbs whether the company is profitable, companies will not make profits out of the schools.

Ms Beverley Hughes: Does my right hon. Friend agree that school truancy and exclusions, which rose so greatly under the previous Government, are now a serious issue, not least because they are strongly associated with subsequent poverty, crime and underachievement? I welcome the announcements that have been made this week, particularly the targets of reducing truancy and exclusion by a third. Will he assure the House that schools will receive the wherewithal to reintegrate young people. both for their own good and for the good of the community in which they live?

The Prime Minister: My hon. Friend will know that we have put additional resources into schools and that more investment will come. However, it is important that the investment is tied to reform. Thirteen thousand children are permanently excluded, and 100,000 children are temporarily excluded, from school every year, but the package that we announced on truancy and exclusions will make a significant difference. It will give the police powers to pick up children who are playing truant, and it will impose new responsibilities on parents. Equally important, it will also ensure that children who are excluded are not left with two or three hours' schooling a week—so that they roam the streets or do whatever they like for the rest of the time—but are put in a structured setting where they will receive a proper education.

Mr. Simon Hughes: As the Prime Minister prepares for the G8 summit in Birmingham on Saturday, will he reflect on the fact that the Jubilee 2000 campaign for the cancellation of debt in the poorest countries in the world—representing about 1 billion people—is hugely

more popular than the Government's proposal to commemorate the millennium by building a dome at Greenwich? I offer him a way out of his dilemma and a way in which to make the dome far more acceptable. Will he call for the papers on the desk of the Chancellor of the Exchequer that propose using the dome as a place where individuals, companies and the public sector, with the Government, can sign up to a package of practical proposals that would cancel the debt that is owed to Britain? Will he also recommend similar proposals to the other countries of the G8?

The Prime Minister: As the hon. Gentleman may know, there has been a series of meetings about proposals to encourage debt relief. My right hon. Friend the Chancellor has suggested mechanisms to allow people to give more money in charity to the developing world and has led the way in new proposals for debt relief. We will discuss those matters at the G8, and we are well aware of the Jubilee 2000 activities over the weekend. The people involved obviously want us to do more to help the developing world. We are considering how we can make progress, and in the communiqué that we eventually issue, if it is as I hope it will be, there will be concrete measures to bring relief to the countries concerned.

Mr. Gareth R. Thomas: Is my right hon. Friend aware that, following last Thursday's council elections, my constituents in Harrow have the advantage not only of a Labour Government but, for the first time, of a new Labour council? Will he congratulate those people who voted Labour on Thursday on helping to end an incompetent and inept Liberal Democrat administration that cut school budgets yet, in line with the windy hypocrisy of the right hon. Member for Yeovil (Mr. Ashdown), continually tried to shirk responsibility for that action?

Madam Speaker: Order. The hon. Gentleman accused another Member of Parliament of being a hypocrite. He must rise now and withdraw that remark.

Mr. Thomas: I apologise, Madam Speaker. I withdraw that remark.

The Prime Minister: I send my congratulations to all my hon. Friend's colleagues in Harrow who achieved such a marvellous result, and to all those who have helped to ensure that people will get not only prudent finance but decent public services under a Labour council.

Oral Answers to Questions — BILL PRESENTED

REGISTRATION OF POLITICAL PARTIES

Mr. Secretary Straw, supported by the Prime Minister, Mr. Secretary Prescott, Mr. Chancellor of the Exchequer, Secretary Margaret Beckett, Mr. Secretary Dewar, Mr. Secretary Davies and Mr. George Howarth, presented a Bill to make provision about the registration of political parties: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 188].

School Transport

Dr. George Turner: I beg to move,
That leave be given to bring in a Bill to make new provision with respect to home-to-school transport for pupils in maintained schools; to provide for the payment of grants to defray the costs incurred by local education authorities, and for connected purposes.
My Bill would require the Secretary of State for Education and Employment by regulation to direct local education authorities to prepare and submit school transport plans, having undertaken appropriate consultations. Such plans would set out for each authority proposals for funding and organising transport for the pupils for whom the authority provides education, having taken into account any relevant factors, which would not be restricted but would have to include distance, safety and charging policies. All such plans would be within a framework to be set by regulation.
Each local education authority's plan would then be subject to approval by the Secretary of State, who would also be able to modify them. Regulations would include provision for payment by the Secretary of State of grants to local education authorities to defray the relevant costs. Those regulations would themselves require approval by each House of Parliament.
The law in respect of home-to-school transport has remained substantially unchanged for more than 50 years. Without question, there have been many changes in society over that time, and it is now widely accepted by those who implement the law that the time is right for it to be reviewed.
Although amended in detail and consolidated, the current law is still in essence based on the Education Act 1944. It links provision of transport with the issue of school attendance, which is currently receiving so much attention. The law states that parents have a defence against failure to fulfil their legal responsibility to ensure that their child is educated if they live a certain distance from the nearest appropriate school—two miles for children up to the age of eight, or three miles for older children—and the authority has not provided free transport.
The distances involved—described in the legislation as "walking distances"—are based on assumptions that must have originated in the 19th century about what could be considered a reasonable distance for a child to walk to and from school accompanied by a parent. Compulsory education has been substantially supplemented by a number of Governments, particularly the present one, to include nursery and sixth-form provision, and post-16 college education, none of which are covered by the legal requirements of free transport.
Inside those distances, responsibilities for ensuring that children attend school rests with parents, and any provision beyond the legal minimum is entirely at the discretion of local education authorities, which may meet all, part or none of any costs involved.
In recent years, many authorities—including mine in Norfolk when I was chairman of the education committee—that have exercised such discretion have been withdrawing services and introducing or increasing charges to parents, most notably those of post-16 students.

As we approach the 21st century—not the 19th—the concept of walking distance as originally defined is simply no longer appropriate. The need to review it is reinforced by the many problems that arise as a result of the variety of charging mechanisms that are now in place. Changes in charges have done much to highlight perceptions of unfairness that always exist when there are strict cut-off points: a parent who lives 2.99 miles from school must pay; one who lives 3.01 miles from school need not.
Any review envisaged by my Bill would need to take full account of the many changes that have taken place in society and its use of transport since 1944. There have been major increases in the number of vehicles on the road and in their usage, so that roads have become more dangerous. The provision of public transport has been declining dramatically in many cases, particularly in rural areas. More pupils live further from school—a trend emphasised by parents' additional rights to express a preference regarding the school that their child attends.
For many reasons, parents are less willing to allow their children to be unaccompanied outside school. The changes in the provision of home-to-school transport have led to many parents undertaking the infamous "school run". At peak times during school terms, as many as one in five journeys undertaken are to take children to or from school. A truly integrated look at our transport policy could only be enhanced by the introduction of measures designed to reduce such car traffic substantially. Any review of school transport must encourage local authorities to ensure that provision is made to encourage pupils to walk or cycle safely to school, and for appropriate alternatives to the private car wherever reasonable.
The Bill will ensure that the varied needs of individual localities are taken into account. The needs of inner cities will differ from those of rural counties. It is envisaged that Ministers will encourage wide consultation, appropriate partnership arrangements and the funding of innovative schemes as we modernise home-to-school transport for pupils.
The Bill also deals with the vexed issue of funding, but although it is hoped that additional funding will be available in due course, it is not specifically required. Local education authorities currently receive support for their transport expenditure through the vagaries of the so-called "sparsity factor" within the complicated rate support grant mechanism. The Bill would replace that mechanism with a much more transparent grant and would also provide a funding mechanism for approved innovation or experimentation—much like the action zones for school standards. There has been widespread support in local government for a review such as that proposed by my Bill, which has the general support of the Local Government Association.
I hope that my Bill will contribute significantly to Government policy on road traffic reduction, help us to meet our international commitments on global warming made at Kyoto and make our towns and cities better places to live—but it must also ensure that journeys to school remain safe. Despite popular misconceptions, the recent study by the Association of Transport Co-ordination Officers and the passenger transport executive group shows that school journeys are not more


dangerous than other journeys undertaken by pupils and that travel by car, rather than being safer, is far more dangerous than travel by bus.
We must look to partnership to deal with issues of home-to-school transport, achieve safety measures for cyclists so that cycling becomes much safer—it is the most dangerous way for children to travel to school—and discourage the use of cars, which are 50 per cent. more dangerous than the amount of pupils they carry would suggest.
The funding mechanism must be tackled. In my county of Norfolk, the money spent on transporting children to school is enough to buy computers for every pupil entering primary school and to replace them with new computers when they enter secondary school. Local education authorities have tried to reduce payments for school transport as they address the Government' s agenda of raising school standards. Understandably, the Department for Education and Employment, too, does not want money to move from the classroom to transport.
Through increased petrol taxes, the Government have done much to irritate rural dwellers who have no alternative to using a car. The Government, through a different funding mechanism and by spending to reduce road traffic through the Department of the Environment, Transport and the Regions, could ensure that the money was properly spent. I commend my Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Dr. George Turner, Mrs. Linda Gilroy, Mr. Stephen Pound, Mr. Anthony D. Wright, Dr. Ian Gibson, Mr. Martin Linton, Mr. Phil Willis, Mr. Bob Blizzard, Mr. David Drew, Mr. Cynog Dafis and Mr. Charles Clarke.

SCHOOL TRANSPORT

Dr. George Turner accordingly presented a Bill to make new provision with respect to home to school transport for pupils in maintained schools; to provide for the payment of grants to defray the costs incurred by local education authorities, and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 3 July, and to be printed [Bill 189].

SOCIAL SECURITY BILL [MONEY] (No. 2)

Queen's recommendation having been signified—
Resolved,
That, for the purposes of any Act resulting from the Social Security Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred under the Act by the Commissioners of Inland Revenue. — [Mr. Kevin Hughes.]

Orders of the Day — Social Security Bill

Lords amendments considered.

Mr. Oliver Letwin: On a point of order, Madam Speaker. The financial memorandum was issued before the Lords considered the Bill and contains figures in tens of millions. Since then, the financial effects have increased and the sums involved will be between £1.3 billion—and, if the amendments are accepted—at least £2.6 billion greater. Could you instruct me how the Government should proceed under such circumstances?

Madam Speaker: The matter that the hon. Gentleman has raised is not a matter for the Chair. The financial implications of the Bill are a matter for the Government. The hon. Gentleman can seek to catch my eye to put those points to the Minister at the appropriate time.

Clause 6

LORD CHANCELLORS PANEL FOR APPOINTMENT TO APPEAL TRIBUNALS

Lords amendment: No. 1, in page 3, line 41, at end insert ("and
(c) in relation to Scotland, the Chief Medical Officer of the Scottish Office.")

The Parliamentary Under-Secretary of State for Social Security (Mr. Keith Bradley): I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker: With this, it will be convenient to discuss Lords amendments Nos. 2, 4, 7, 8, 98, 100, 101 and 113.

Mr. Bradley: The amendments change the provisions relating to appointment of persons to the panel to act as members of appeal tribunals. The Bill currently provides for the Lord Chancellor and the Lord Advocate each to appoint a separate panel under clauses 6 and 7 respectively. The effect of the amendments is that the Lord Chancellor will be responsible for the appointment under clause 6 of a single panel for the whole of Great Britain.
The amendments were prompted by the introduction of the Scotland Bill, which interacts with the operation of clause 7. Under the provisions of that Bill, there will be some changes to the role of the Lord Advocate. It is possible that the Lord Advocate, as a Minister in the Scottish Executive, might have functions similar to those which he currently exercises in relation to tribunals; however, the position will not be clear until after Scottish devolution has taken place. At that stage, the UK Government may consider transferring a Scottish Minister the function of making appointments to a panel in relation to Scotland, through provisions in the Scotland Bill for the further transfer of functions.
We consider it important to have clarity in responsibility for the appointments and to preserve the independence of the panel and appointments to it.


We have concluded that it would not be right to retain clause 7 in the knowledge that the functions it lays on the Lord Advocate would be removed through another Bill currently before Parliament. I commend the amendments to the House.

Mr. John Swinney: I have listened carefully to the Minister's speech and read the various notes on the clauses and the amendments, but I do not fully understand why the Government believe it necessary to make such a change.
If I heard the Minister correctly, he said that, once the Scottish Parliament and the Scottish Executive were functioning fully, it was either likely or possible for the power of appointment to be repatriated to a Minister who may be a member of the Scottish Executive. As I understand the Scotland Bill, the powers of the Lord Advocate in general will not be dissimilar to the powers of the Lord Advocate today, yet the Lord Advocate is to be stripped of an important power to make appointments to a tribunal.
That raises the issue of more power haemorrhaging, on a temporary basis, to the Lord Chancellor's Department, and I wonder to what extent there will be enthusiasm for the power being repatriated to the Scottish Executive at some stage in the future. Once power has moved in one direction, it is hard to imagine it moving back to the Scottish Executive. I should be grateful for some explanation from the Minister on that point, and specifically on the process to be used by the Lord Chancellor's Department to ensure that the input that the Lord Advocate can clearly bring to the appointments process will be assured while the arrangements change.
It is a point of interest and importance that, during the passage of the Scotland Bill, the Government resisted amendments that I tabled with the support of many voluntary organisations, which were designed to devolve to the Scottish Parliament the power of administering various aspects of social security. I stressed the importance of ensuring that a Scottish perspective was brought to the process of administering social security in Scotland.
For example, the House has often debated the weaknesses of the administration of the benefit integrity project, and I should have thought that a Scottish perspective would bring tighter administrative processes to that project. I do not understand why the Government fiercely resisted my amendments then, given that we are now faced with proposals in the Social Security Bill to take more power away from one of the Ministers who may be a member of the Scottish Executive and who could act to secure Scottish interests.
I seek clarification. I fear that an important power currently exercised by the senior Law Officer in Scotland may not be exercised by the Scottish Executive, and the temporary hiatus is unsatisfactory.

Mr. Bradley: It would not be appropriate to repeat all the arguments advanced in debates on the Scotland Bill. Let us stick to the point that we are discussing. We are trying to ensure clarity during the interim period until the proper functions and arrangements for transferred functions in the Scotland Bill have been finally clarified.

We do not want any delays or problems in the appeal system in the meantime, and we want to ensure its continued independence.

Mr. Simon Burns: The Minister says, "until the powers and functions have been clarified." What is the stand-by position if clarification does not work out in the way that I assume the Minister expects?

Mr. Bradley: It is not our intention that the arrangements will not work out. We cannot hypothetically guess what would happen if something else does not happen.

Mr. Burns: Will the Minister give way?

Mr. Bradley: No. This is a small point, and I want to make progress.
I take the point made by the hon. Member for North Tayside (Mr. Swinney) about the Lord Advocate's being made aware of, and involved in, discussions, and I shall write to the hon. Gentleman on it. We want to ensure a smooth transition of functions. Agreeing with what was universally agreed in the Lords will advance that process, and ensure that there is no confusion. I hope that that satisfies the hon. Gentleman, but I shall consider his point and ensure that he receives a written explanation if the arrangements that we intend to introduce will, in any way, undermine the Lord Advocate's opportunity to be involved in discussions.

Lords amendment agreed to.

Lords amendment No. 2 agreed to.

Clause 8

CONSTITUTION OF APPEAL TRIBUNALS

Lords amendment: No. 3, in page 4, line 20, at beginning insert ("Subject to subsection (1A) below,")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker: With this, it will be convenient to discuss also Lords amendments Nos. 5, 6, 9 and 108.

Mr. Bradley: Lords amendments Nos. 3 and 5 are about the legal qualifications of tribunal chairmen or members. Concerns were expressed in Committee, and in other places, about the proposal that not all tribunals needed a legally qualified member. It was suggested that only a lawyer would have the skills and experience necessary to conduct the hearing of an appeal.
The Government believe that a number of appeals could be determined by an appropriately trained person who does not have formal legal qualifications, but we want to adopt a pragmatic approach, and to introduce new, more effective and efficient arrangements for handling appeals. We have reconsidered both the kind of appeal that could be dealt with by a single, non-legally qualified panel member, and the administrative arrangements for selecting such appeals. We found that fewer than 5 per cent. of appeals could be dealt with in that way, and concluded that there would be no benefit in introducing such an arrangement at present, as the estimated number of cases is very small.
We have decided that, at least for the time being, the practicalities suggest that there is a case for retaining lawyers on all tribunals. We may wish to reconsider the position following welfare reform and the introduction of simpler benefit structures, when it is possible that more cases would be suitable for determination by panel members without formal legal qualifications.
Lords amendments Nos. 6, 9 and 108 clarify issues of detail concerning regulations—also in response to anxieties expressed here and in another place. Amendment No. 9 stipulates that regulations shall be made to provide for
the composition of appeal tribunals; (b) the procedure to be followed in for allocating cases among differently constituted tribunals; (c) the manner in which expert assistance is to be given
to the tribunals.
As I said in Committee, it has always been the Government's intention to make regulations to provide for these matters; the amendments simply do so in the Bill. I remind the House that regulations made under clause 8(3) will be subject to the affirmative resolution procedure. I commend the amendments to the House.

Mr. David Rendel: As the Minister might expect, I am delighted with the amendments, and I fully support what he is doing. We said in Committee that it might not be obvious at these appeals that legal points might be about to be raised, so I am pleased that Minister now accepts that many cases may involve legal implications, and that the cases which do not are so few and far between that it is not worth the risk of leaving out legally qualified people.
It has always seemed to us likely that time and money would be saved by putting someone with legal qualifications on every panel. I still believe that to be true, and it seems that the Minister now more or less agrees. Even in Committee, the Government accepted that it was important that legal advice should be available at all times. The amendments are the obvious and logical conclusion of what they said then.
In Committee, my good and hon. Friend the Member for Northavon (Mr. Webb) said:
The Bill will make it possible for a single person to decide a social security appeal. Although the Minister has assured the Committee that that person will be 'a decent chap or chapess', there is no requirement that he or she have legal qualifications…it is possible that the person who comprises a single-member tribunal will have no legal qualification.
Despite what the Minister has said today about including the requirement in the Bill, it is worth reminding the House of what he said in Committee:
We do not accept that qualification requirements of tribunal members should be in primary legislation." — [Official Report, Standing Committee B, 4 November 1997; c.15–6.]
I am delighted that the Minister has reversed what he said in Committee, and proud that my party made the point at the time.

Mr. Nigel Waterson: I, too, welcome the amendments. It is also a great pleasure to see the Minister in his place, reminding me of many pleasant hours spent in Committee. As he rightly said, concerns were expressed there and elsewhere about this point—and I was

one of those who expressed them. The Minister used the phrase "adopting a pragmatic approach", for which read "U-turn". I assume that that is the new spin doctor's term for a U-turn, and I look forward to the phrase appearing with dismal regularity throughout the rest of today.
I had written down the phrase "a listening Government", but it seems that that hoary old chestnut has been put out to pasture—[Interruption.] I do not believe that the Minister actually used the phrase today, although it is perhaps so deeply embedded in his psyche that he thinks he did. At any event, we heard it used a great deal in Committee. It is just a pity that the Minister did not listen to us on this particular point.
In Committee, the Minister was adamant that this was not the right way to go, but he left himself a small escape hatch by saying that the Government might have to revisit the issue following welfare reform. We know that that is a very long way off yet so we need not dwell on that at great length today.
The Minister touched on the question of the affirmative resolution procedure. He is right to say that we will come to that in much more detail later.
It is worth revisiting the Committee stage, when members of both Opposition parties not only put their views on the question of a legally qualified member or members of an appeals tribunal, but prayed in aid the views of several independent organisations. The Law Society was one. In its brief on the subject, the Legal Action Group said that it was
opposed to the proposed change to the composition of tribunals, which would be a retrograde step.
It went on to commend the present practice of a legally qualified chair.
4 pm
In Committee, on Report and on Third Reading, the Opposition pressed the Government hard on the point that it was unacceptable for an appeal to be heard by a one-man tribunal who did not even have to be legally qualified. There was quite a long debate on the subject. The Minister remained courteous but absolutely adamant on the subject. He said that the proposed amendments to clause 8 would
undermine one of the Government's key objectives—that of introducing an efficient and responsive appeals service".

Mr. Letwin: While my hon. Friend is expanding that extremely important point, let me ask him this. Does he agree that it would have been helpful if the Lords had brought forward amendments on what must have been 120 or so other subjects about which the Minister was equally adamant; I am thinking of all the occasions when we drew attention to excessive regulatory powers and he explained that it would be against the spirit of the Bill to make any changes?

Mr. Waterson: My hon. Friend is exactly right. On any number of issues, the Minister stuck to his brief like glue, presumably for fear of something worse. There are some matters before us today on which we genuinely welcome his change of mind. It is a pity that we had to go through the entire Committee stage, and, indeed, other stages of the Bill's proceedings before that change of


mind occurred—but we must not be churlish, and we must recognise that, on this issue, if not on others, he has got it right in the end.
The Minister went on to say in Committee:
We do not accept that qualification requirements of tribunal members should be in primary legislation." — [Official Report, Standing Committee B, 4 November 1997; c. 158.]
That is very clear. He did say at one point that he would reconsider matters, but, after an intervention from the hon. Member for Northavon (Mr. Webb), he made it clear that it was a question of doing so not in drafting any amendments to the Bill, but in drafting the regulations.
Therefore, it seems that the Minister has done a U-turn—or adopted a pragmatic approach, to use the correct language—on two issues in this instance. One is the need for the matter to be dealt with in the Bill itself, and the other is the central principle of legally qualified members of tribunals.
The matter went to another place, which carried out its historic function of revising legislation. There, for reasons that remain a mystery to Conservative Members of this House, the Government did finally see sense. In answer to an amendment that was moved by Lord Archer of Sandwell, the Government accepted that at least one of the members of a tribunal should be legally qualified.
As Lord Archer of Sandwell said in his speech on the Bill:
at least one member of the tribunal shall have such a quality, leaving it to the president to decide who should take the chair on any specific occasion",
making it a somewhat compromised proposal, but that found favour with the Government in the other place.
There was a helpful contribution from Baroness Anelay about her experience as a member of tribunals for some 14 years. She said:
Social security law is notoriously complex".
I think that all right hon. and hon. Members agree with that, given the sort of problems with which we regularly have to deal at our advice surgeries and in our mail bags.
It fell to Lord Hardie to accept the proposals in the other place. As he said:
the Government have concluded that, for the time being at least, there is a case for the retention of lawyers on all tribunals." — [Official Report, House of Lords, 20 April 1998; Vol. 588, c. 94–2.]
That was after discovering, after all this time—and as the Minister has acknowledged—that only about 5 per cent. of all cases heard by all tribunals can be dealt with by a one-man tribunal who is not legally qualified.
The Minister was good enough not to use the phrase "the listening Government". The Government had every opportunity to listen at the time. As the Minister said in Committee, the Government
wish to get the Bill into the public domain and to use the period between Second Reading and the Committee stage to listen to the views of interested parties and ensure that corrections and changes are made so that they can be properly debated in Committee." — [Official Report, Standing Committee B, 28 October 1997; c. 20.]
That was a pious hope; the present change has been made very much at the last minute.
I want to make a couple of points about another matter that is the subject of one of the amendments—the curious distinction between "shall" and "may". We had some

debates about that in Committee, on one instance at my behest. We pointed out the strange wording in a number of different parts of the Bill. The Minister then said:
I have a small comment about "may" and "shall". I am assured that this is the normal way of drafting regulations in the Bill; there is no sinister intention behind it."— [Official Report, Standing Committee B, 4 November 1997; c. 192.]
Yet both in this and in later clauses, such as clause 13, the drafting has been changed to "shall". We might as well have saved our breath. I would be interested to hear from the Minister who is now assuring him that this is the normal way to draft these matters.
In the other place, Lord Hardie argued that the change was necessary to
make clear that regulations shall be made, to provide for the composition of tribunals." — [Official Report, House of Lords, 20 April 1998; Vol. 588, c. 961.]
That was precisely the argument advanced by the Conservatives in this House, but again it was ignored by the Government.
Having said that, we welcome the amendments, which have our support.

Mr. Keith Bradley: There is obviously some disappointment that I did not make it clear that we are a listening Government, so I put that on the record now. As a result of that listening, there is universal support for the amendments on both sides of the House.

Lords amendment agreed to.

Lords amendments Nos. 4 to 9 agreed to.

Clause 9

DECISIONS BY SECRETARY OF STATE

Lords amendment: No. 10, in page 5, line 29, after ("138(1)(a)") insert ("or (2)")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker: With this, it will be convenient to discuss Lords amendments Nos. 11, 14, 44 and 173.

Mr. Bradley: These are all technical amendments. Amendment No. 10 would ensure that there continue to be rights of appeal against decisions on cold weather payments and winter fuel payments.
Amendments Nos. 11 and 44 would replace "decision" with "revision" to clarify when references are being made to revised, rather than original, decisions.
Amendments Nos. 14 and 173 are technical amendments, which would move provisions formerly contained in clause 12(2) of the original print of the Bill—now renumbered clause 11—into section 16(5) of the Industrial Tribunals Act 1996. The provision to be inserted into the 1996 Act is a re-enactment of section 58(4) of the Social Security Administration Act 1992—the Administration Act.
I commend the amendments to the House.

Mr. Simon Burns: We are grateful, as ever, to the Minister for that brief but comprehensive explanation of the amendments. Listening to him, one would have thought that these were, as he said,


straightforward, drafting, consequential amendments. If the Minister had read the Lord Advocate's comments in the other place, he would understand that there is a little more—although not a lot—to these amendments than meets the eye. However, in this era of spin doctors, he wants to gloss over that fact.
I shall not detain the House for long in speaking about the certainty of the need for Lords amendments Nos. 10 and 14. However, I believe that the amendments typify the Government's slapdash approach to the Bill. As the Minister has plainly stated, the amendments are simple and straightforward, and ensure the maintenance of current rights of appeal against decisions on cold weather payments and winter fuel payments. The amendments are therefore perfectly reasonable propositions, with which I do not think any hon. Member would disagree.
Nevertheless, the question must be asked: why were the provisions not in the original Bill? The answer is quite straightforward, although the Minister certainly will not give it to us. In the Mandelson school of spin doctoring, anything that the Government do that is wrong or slapdash is to be airbrushed out of existence, followed by a spin to minimise any embarrassment to the Government. The answer, which is straightforward, is that the Government plainly and simply forgot to include the payments in the list of relevant benefits. That was an extraordinary oversight.
The Government's approach to the amendments was—as I said, and as our consideration of subsequent groups of amendments will show—typical of their general approach to the Bill. The need for the amendments is but an episode in a long-running saga of mistakes, slip-ups and incompetence, which have been typified by administration of the winter fuel payment scheme announced last November by the Chancellor. Although the Minister will not find it terribly palatable, the need for this group of amendments demonstrates the problems in the Government's approach.
One problem, for example, is that 40,801 out-of-date cheques were sent to pensioners, who tried to cash them at their local post offices, but could not. Pensioners living in residential homes who should not have received a cheque received one. To compound the problem, pensioners who quickly cashed their cheque will be allowed to keep the money, whereas those who did not cash their cheque will be penalised by having to return it.
There have been problems in determining the payment amount—£10 or £20—that pensioners should receive. My constituents have written to me about that problem, as I am sure that other constituents across the country have written to their hon. Members. I realise that Ministers are embarrassed by such problems, which show that, in their rush to impose the scheme, they have acted negligently and not properly thought through the scheme. They have been caught making some crass mistakes.
Nevertheless, we welcome the fact that, as the Lord Advocate said in another place, the Government have at least had the nous to spot the mistake before the legislation is passed—thereby avoiding not only the need for further legislation to deal with the problem, but further problems with the legislative timetable in this Session.
Lords amendments Nos. 11 and 44 deal with the thorny issue of the difference between "decision" and "revision". The issue is probably more important to aficionados and

to those who have taken the time to read the Bill than it is to those who are not and have not. We dealt with the issue in Committee, and I am pleased to note that the Government—as they have been forced to eat humble pie—are prepared to make the amendments.
In Committee, we made the point on the difference between the two words. The Minister assured us that there was no need to do anything about it, because the Government had got it right. They have now accepted that there is a need to change the Bill's wording, which is the purpose of Lords amendments Nos. 11 and 44. In the words of the Lord Advocate, the amendments are simply to improve or correct minor errors in the drafting of the Bill.
I see that the new line from Millbank tower is to emphasise the fact that the Government are a listening Government. The Minister never fails to use that soundbite whenever possible. I have to tell him, in the nicest possible way, that if he really believed that and did not simply pay lip service to the concept to keep the Minister without Portfolio happy, he would have listened— [Interruption.] I can hear what the Under-Secretary of State for Social Security, the hon. Member for Southampton, Itchen (Mr. Denham) said; there is no need for him to be quite so cruel. If the Minister were genuinely prepared to listen, he would have listened to the points that we made time and again in Committee and would have tabled amendments at that stage, which would have saved the House's time today.
I can reassure the Minister by saying that, because the amendments merely redress Government mistakes and slip-ups, we have no intention of opposing them. We welcome the fact that the Government are correcting their own mistakes prior to the legislation reaching the statute book. However, as the Minister would not answer our questions in Committee, I suggest that the next time he has the satisfaction of being in Committee, he listens more carefully to the Opposition's valid points and accepts them then, instead of wasting time on the Floor of the House to correct the Government's mistakes.

Mr. Swinney: I hope that the Minister appreciates how difficult it is being on the Opposition Benches when one has to follow the line of argument pursued by the hon. Member for West Chelmsford (Mr. Burns) —it is often terribly challenging.
At various stages during the passage of the Bill, the sense has been abroad that the appeal rights of people entitled to benefits were being compromised. I think that the Minister will agree that that sense has prevailed and that it causes enormous concern to people who depend on particular forms of benefit. I am sure that we have all received representations from such people. Whether a conspiracy involving Millbank tower, Mandelson or anyone else is at the root of the problem, I appeal to the Minister to ensure that legislation is designed in such a way that it takes into account the anxieties felt by various groups of people who are dependent on benefits, and does not cause the unease that has been experienced in recent months.

Mr. Keith Bradley: The crucial philosophy behind the Bill is to ensure not only that people retain their right to


appeal but that they get justice much more speedily than the current system allows. One of our constituents' biggest anxieties is the length of time that they have to wait for their appeals to be heard. Another is the lack of opportunity to clarify genuine mistakes and errors or to have a second look at the benefit calculation or entitlement at an early stage.
The purpose of the Bill is to streamline the process without denying people their rights during that streamlining process. The amendments ensure that that element, which had been omitted from the Bill, is now included. Again, we have listened, and are ensuring that the Bill is as clear as possible.
I commend the amendment to the House.

Lords amendment agreed to.

Lords amendment No. 11 agreed to.

Clause 11

DECISIONS SUPERSEDING EARLIER DECISIONS

Lords amendment: No. 12, in page 6, line 29, leave out ("subsection (3)") and insert ("subsections (3) and (3A)")

The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker: With this, it will be convenient to discuss Lords amendments Nos. 13, 72 and 103.

Mr. Denham: Members of the Standing Committee that considered the Bill will recall that I announced on 25 November last year our intention to introduce this measure, but it may be helpful if I explain exactly what it will do.
When a company owes a contributions debt and fails to pay the debt in full, there will be an investigation to see whether the failure to pay the debt is due to the negligent or fraudulent behaviour of any or all of the directors or officers of the company. If it is, the Secretary of State may decide to transfer the debt and any associated penalty to the directors personally.
During discussions in another place, peers of all parties supported the principles behind the measure. The Government are determined to stamp down on the minority of dishonest business people who defraud the national insurance fund of money that funds benefits for their own employees and other benefit claimants and pensioners.
It is clearly essential that a power to transfer large debts to individuals should be accompanied by a robust appeal system. The clause provides for that, and I am pleased to draw the House's attention to the fact that, following discussions in another place, the Government amended the original drafting of the clause to strengthen the appeal arrangements. In particular, the Bill now states clearly that the onus of proving guilt will fall on the Secretary of State. A tribunal considering an appeal will undertake a complete rehearing of the facts.
We intend that the measure will be used primarily, although not exclusively, to catch phoenix-type directors who deliberately and repeatedly fail to pay

contributions—and usually PAYE tax—and then put the company into insolvency, having made a personal financial gain.
The measure demonstrates the Government's determination to clamp down on business fraud. It will help small, honest businesses by tackling the unscrupulous minority who cheat both trade creditors and the Government of moneys owed. We cannot tolerate money that belongs in the national insurance fund to pay people's benefits ending up in the pockets of fraudulent directors.
I hope that hon. Members on both sides of the House will fully endorse the amendments. I commend them to the House.

Mr. Letwin: Perhaps I have been asked to speak from the Front Bench on this important matter because the House is so full.
In common with Liberal Democrat Members, we wholly support the aim of trying to do something serious about phoenix companies, although most of the action that needs to be taken against such companies is not in the Bill, but in other measures. We accept that there is an issue to be addressed in respect of contributions, tax and debts to trade creditors and others, and that action needs to be taken to ensure that moneys that are owed are recouped.
However, the Minister took a slight liberty with exactitude when he suggested that, in another place, members of all parties supported what he described as the principles behind the group of amendments. In particular, I refer to amendment No. 72. Lengthy speeches were made by my noble Friends and by Lord Goodhart on behalf of the Liberal Democrats explaining exactly why the principles behind the amendment are repugnant to us and to the deepest principles of British jurisprudence. Today, we intend to establish the principles that we consider to be of the utmost importance to the legislation and generally.
The problem is well illustrated by the remarks by the Under-Secretary of State for Social Security, the hon. Member for Manchester, Withington (Mr. Bradley) who said in respect of the previous group of amendments that the Government's aim—which we accept is an admirable one—was to streamline the process without denying the rights of individuals. Amendment No. 72 does exactly the opposite: it tramples over individual rights.
In the context of phoenix companies, which have caused so much public concern, it is understandable that there should be an urge to legislate effectively. However, it is not right that the House should legislate in a way that ignores the proper rights of individuals, even in addressing a gross abuse.
The most signal phrase in amendment No. 72 is in what would become section 121C(1)(b) of the Social Security Administration Act 1992. It states that, in order for the Secretary of State to take action, it must appear to him that the failure in question is
attributable to fraud or neglect".
In another place, Lord Goodhart gave an extraordinarily clear and powerful description of the amendment's effects. He said:
the amendment is, I believe, plainly incompatible with the European Convention on Human Rights and therefore with the Human Rights Bill".


He specifically referred to article 6 of the European convention, which provides:
In the determination of his civil rights and obligations…everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
Lord Goodhart went on accurately to describe the streamlined process, to which the Minister referred, that would be created by amendment No. 72. He asked:
What happens under clause 63?"—
now clause 64. He continued:
First, the Secretary of State, through members of her staff, investigates the reason for the company's failure…Secondly, the Secretary of State, through another member of staff, concludes that the failure has been due to the fraud or neglect of a director".
Lord Goodhart did excessive justice to the phrasing in the clause, because the Secretary of State needs to conclude only that it appears that there was fraud or neglect. He said:
There is no provision for any kind of hearing before that conclusion is reached. Thirdly, a personal liability notice is served on the director who is found culpable who becomes liable to pay contributions to the Secretary of State.
Lord Goodhart summarised the situation poignantly when he said:
The Secretary of State is the plaintiff, the prosecutor and the judge. There is no independent and impartial tribunal.
Lord Haskel attempted to rebut the remarks made by Lord Goodhart and my noble Friend Lord Higgins, and his remarks have strange echoes for many hon. Members on both sides of the House who attended to what was said when the Child Support Agency was set up and to what has been said on many occasions about administrative practice.
Lord Haskel said:
Decisions in these cases will be taken by a specialised unit".
How reassuring. How could anything go wrong if a specialised unit is to make the decisions? Lord Haskel said that the unit
will have the necessary training and expertise to deal with the issues involved.
To within two words, those are the words spoken by another Minister in another place who was explaining why the CSA would be sure to get all its actions right.
Lord Haskel said:
I emphasise that these are not entirely new areas of work for the Contributions Agency…Secondly, a decision will be made only after all the relevant facts have been fully investigated.
How frequently we find that the vast apparatus of the social security system achieves perfection in ensuring that a decision is made only after all the relevant facts have been fully investigated. Presumably that is why there are no errors in the CSA's activities, why the Benefits Agency has no Members of Parliament submitting cases to it and asking for facts that have not been fully investigated to be examined afresh and why, in short, the system is perfect. Following that grand assurance, Lord Haskel said:
I hope that this reassures your Lordships that we will be taking all reasonable steps".
The long and short of it is that, in another place, a senior advocate, who is also the Liberal Democrat spokesman, raised a serious question about the compatibility of amendment No. 72 with the European

convention on human rights, which the Government are enacting. Lord Haskel, speaking for the Government, replied that we should be reassured that there would be no human rights problem because the decisions would be made by a specialised unit after all the relevant facts were known and the administrators could be relied on to protect human rights. Nobody in this House could possibly accept that as an adequate rebuttal of Lord Goodhart's points, which were echoed by my noble Friend Lord Higgins.
If we look deeper and ask whether a legal explanation of the compatibility of the amendment with the European convention on human rights was given, I fear that we find no greater assurance. Lord Haskel told the other place:
So far as concerns the European Convention on Human Rights, we have discussed the matter…and with officials…We are satisfied that the clause meets the Government's obligations".— [Official Report, House of Lords, 23 April 1998; Vol. 588, c. 1277–80.]
That was the last thing he had to say on the matter. Despite the fact that there were two meetings outside the other place between representatives of Opposition parties and the Government, and despite the fact that Lord Goodhart made a learned, long and forceful speech about the matters, all the Government did was state that they were satisfied—without answering the logic—that the amendment would be compatible with the European convention and to laud the administrative practices.
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It may be asked—indeed, hon. Members who want to retire for tea or supper probably are asking—why on earth the Opposition should be going on at such length about such a matter. I shall explain. We are dealing with a case of personal liability. Ostensibly, it concerns a civil penalty. Indeed, Madam Speaker—Mr. Deputy Speaker, I do apologise—on various occasions, the Government have made much of the fact that the penalty is a civil one. However, it is a very strange kind of civil penalty.
When a phoenix company or a purportedly phoenix company collapses and fails to pay a contribution that it owes, the director or directors—the amendment allows for an extension to the manager or managers—may be charged an amount that forces that person into bankruptcy and is out of all proportion to the gain that he could conceivably have made from acting on behalf of the phoenix company, unless there was a further fraud of a vast extraction of funds from the company.
There could be cases in which it appears—I stress the term—to the Secretary of State that there has been a fraud or neglect, to which I shall return, in which the director responsible for the neglect, or who appears to the Secretary of State to have been responsible, has benefited from his directorship of the phoenix company to the tune of, shall we say, £20,000 or £30,000, and finds himself faced with a penalty, with compound interest, of £200,000, £300,000 or £400,000. That does not strike me—I very much suspect that it would not strike any hon. Member—as an ordinary civil penalty. It has all the appearance of a criminal penalty.
The crucial constitutional difference, Madam Speaker, between a civil penalty and a criminal penalty, about which we in the House ought to be concerned, is that a criminal penalty is an attempted deterrent. I apologise, Mr. Deputy Speaker. I have not meant to call you Madam Speaker throughout. I had it so firmly fixed in my mind


that Madam Speaker, with all her majestic presence, was in the Chair. I shall try to refrain from addressing her hereafter.
The attempt is not one to allow one party in a civil case to recapture a loss from another party. It is an attempt by the state to create a deterrent against an action that the state believes—and we all accept—is a fraud and wrong, if it has been genuinely conducted in such a way.
The Government have, in effect, accepted that the act and penalty are criminal ones; there is no other reason why they should have instituted an appeal process in which, as the amendment specifically states, the burden of proof is on the prosecution. One would not see that in ordinary civil litigation, but, of course, we would in the tradition of British criminal justice. The Government virtually admit—and certainly ought to admit—that this administrative action relates to a criminal or near-criminal penalty for what is effectively a criminal act.
There is a particular problem, because when the Secretary of State takes such a director not to court but to an administrative tribunal that the Secretary of State has set up, he or she is trying to show that tribunal that neglect has occurred. If the neglect is shown to have occurred, the effective criminal penalty can be levied.
That is an extraordinary state of affairs, because neglect is a highly charged and difficult term and concept. Even in the case of an ordinary, honest company, it is difficult to be sure whether what a particular director has done is neglectful or otherwise. However, it would be easy to argue that there was neglect, as long as one was arguing it before a tribunal that was not especially acute in its legal judgments.
I admit that there has been—thank the Lord—a concession, a listening, by the Government.

Mr. Burns: A climbdown.

Mr. Letwin: I would not want to be as aggressive as to describe it in those terms, but the Government have listened to our argument that at least one legally qualified person should be on the tribunal panel. However, I fear that their listening has not been profound, because no provision has been made for all members to be judges or otherwise legally qualified. It could be that two of the three are not legally qualified.
What is going on? The Secretary of State, through an administrative action, is taking to an appeal tribunal constituted by the Secretary of State—a tribunal two of whose members may not have legal training—a person who is liable to be subject to what is, in effect, a criminal penalty, without a jury. The Secretary of State must then persuade the appeal tribunal that that person should be subject to the criminal penalty because he or she is guilty of the highly vexed charge of neglect, on which even a court with a judge and jury might—indeed ought to—find it difficult to decide.
I fear that what we have here is something different from a streamlined process that does not deny the rights of individuals. There is indeed streamlining—that is the admirable side of the case—but it is a streamlining which I fear rides roughshod over deep principles of British jurisprudence.

Miss Julie Kirkbride: I am interested in what my hon. Friend says, but those of us who have not

followed the Bill in as much detail as he has would like to know what the position is at present, how directors of phoenix companies are dealt with, what the change is with regard to the Secretary of State's powers, and who sits on the tribunal. My hon. Friend has gone into some detail about those things, but I am afraid that, at the moment, I am still a little uncertain about the precise arrangements.

Mr. Letwin: My hon. Friend asks some important questions, and I can best answer them by referring her to the straightforward and simple amendment that Lord Goodhart suggested in the other place. It shows clearly both what the current position is and how it should be changed. Lord Goodhart simply suggested that the word "appears" should be replaced by the word "is". That would force the matter before a court, which is exactly where it would currently lie, and where it ought to lie.
In the end, a court ought to decide criminal penalties and whether the actions alleged to have occurred did occur. A court should decide whether the person in question is sufficiently culpable to be adjudged to deserve a criminal penalty, if the action itself is adjudged to have occurred.
That is all we are asking for—a little bit of listening on the spot. We did not see much of that in Committee.

Mr. Waterson: A pragmatic approach.

Mr. Letwin: How right my hon. Friend is; a pragmatic approach is all we ask—a slight change of wording, which must already have been considered by Ministers and officials, because it was proposed in another place. That slight change in the wording would have the miraculous effect of rescuing the Bill, which, as was pointed out in Committee, is already deficient in many respects concerning unrestrained regulation, and bringing it into the terrain occupied by the fine traditions of British criminal justice.
The Minister has a golden opportunity to make that slight listening gesture: a small pragmatic concession to good sense. If he does not do that, this or a subsequent Government will have to amend the legislation once they recognise that some individuals' rights are not respected properly because to the structure that the amendment creates.

Mr. Edward Leigh: I have some experience in this area, as, in January and February, I was engaged as a barrister in a seven-week fraud trial involving a phoenix company. Therefore, I may have as much recent practical experience in this area as anyone. I shall try to explain some of the difficulties associated with fraud charges concerning phoenix companies, why I think that the speech by my hon. Friend the Member for West Dorset (Mr. Letwin) was so apposite and why the House should pause before embarking on a novel legal procedure.
Fraud trials are immensely complex and difficult to determine. We are not dealing with simple facts concerning shoplifting, bodily harm or the usual nuts and bolts cases that come before the criminal courts. The fraud trial with which I was concerned involved a phoenix company whose directors were charged with setting out deliberately to close the company. There were no fewer than 3,000 separate exhibits in the trial. There were


initially three defendants, but one defendant pleaded guilty. The trial lasted for seven weeks and initially involved three Queen's Counsel, three juniors and solicitors. Hon. Members might think that the trial cost a lot of money—and it did. It cost a lot of money because people's freedom was at stake.
At least two of the defendants were people of previous good character: they were upstanding and credible members of society, and the trial was the most important event in their lives. As it happens, they were found guilty—I shall not go into the details of what happened to them. It took seven weeks to determine the matter in a public court, where the case was aired fully, with enormous attention paid to detail.
The Government's proposal is similar to what they are proposing in the Crime and Disorder Bill—I serve on the Committee that is considering that legislation, and I am making similar points there. The Government are short-circuiting our traditional and very careful ways of determining guilt. In the Crime and Disorder Bill, the Government are introducing all sorts of measures, such as anti-social orders, curfews and so on. Ministers argue that they will not criminalise anyone because they will be civil procedures. They claim that cases will be determined on the balance of probabilities—as will occur in this instance, which is even more worrying. At least matters will be brought before the magistrates court under the Crime and Disorder Bill. In this case, the Government apparently propose to establish a private inquiry.
As my hon. Friend the Member for West Dorset explained to the House, a Government Department will effectively initiate the proceedings. It will be the prosecutor of those proceedings, it was initially to be the defendant in the proceedings—perhaps that will not occur now—and it will be the final judge of the proceedings. If it was the 18th century, people would be up in arms about that. They would be extremely concerned that a Government Department could pursue company directors and other upstanding members of society who are engaged in legitimate business. I know from practical experience—I spent eight weeks this year examining the matter in detail as it applied to one company—that it is incredibly difficult to resolve such issues.
The company with which I was concerned was in Barnsley. For years, it had traded successfully as a subcontractor for British Coal, which had increasingly asked small companies to go into the mines on salvage operations. The company was run by a tremendous character—everyone in the industry knew him—but he flew by the seat of his pants and had, before the new directors were brought in, built up enormous debts with Customs and Excise and the Inland Revenue.
When he was told that his company would go under, he brought in an accountant, who was subsequently charged with fraud, and an investor with experience of investing all over the world—he was a considerable business man—who was also subsequently charged with fraud. The charges against them were that they had created a phoenix company—they had closed down the first company, deliberately leaving behind the debts to the Inland Revenue and to Customs and Excise, and set up a new company, which also subsequently closed down.
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During the trial, these matters were extremely difficult to understand. I think that I am of moderate intelligence—although I am not nearly as bright as my hon. Friend the Member for West Dorset—but, for the first three months in which I read the papers and ploughed through the 3,000 separate exhibits, I found the terms of art incredibly difficult to understand. People who engage in fraud are not fools; they cover their tracks. We are not talking about a poor old lady nicking Kellogg's packets at the supermarket.
At the end of the lengthy trial, it was determined that the defendants had been engaged in fraud. However, there were further complications, as British Coal had started to close down the contracts to the company. The second company went into debt, not because of inefficiency, but because British Coal had turned off the tap, as it were—that was, effectively, the company's defence.

Mr. Letwin: My hon. Friend makes a massively learned contribution, which clarifies matters. Does he agree that the measure could create an even worse situation than the one that he is describing, as we could be dealing not with fraud, but with neglect? From his vast experience of these matters, can he cast any light on how difficult it might be for a court, let alone a tribunal, to establish what constituted such neglect—not even undue neglect—as to lead to a director facing a quasi-criminal penalty?

Mr. Leigh: I am glad that my hon. Friend has made that point, as that has worried me for some time. Fraud has to be proven, which is extremely difficult. We hear numerous complaints in the House about lawyers wasting public money, but it is difficult to determine whether someone has set out to commit fraud. However, it is possible to find out; in the case with which I was dealing, the jury found some pointers that showed fraud.
Difficult as it is to prove fraud, how much more difficult is it, as my hon. Friend the Member for West Dorset said, to prove neglect? Is neglect a matter of incompetence or the changing market, for example? If I was conducting a hearing in the rather alarming specialised unit that is proposed, I am not sure how I could prove neglect. We want to hear much more from the Minister about how the specialised hearings will be conducted. I am also worried about the penalties.
One of the defendants in the trial had no equity in the company, but was an accountant who was paid a fee. The jury concluded, rightly or wrongly, that the fee was out of all proportion to the advice that he gave to the second company. There were literally days of evidence about the amount that he charged. As I understand the clause, an accountant who received a relatively low fee could be held liable for massive debts—more than £2 million in the case that I have cited.
We have deliberately created complex company law over generations to try to encourage enterprise and convince directors that, as long as they do not act fraudulently, they have some protection against the vagaries of the marketplace. Many companies went down in the 1980s through no fault of their own. The issue has been blown up because of the few lackadaisical, or perhaps criminal, directors who have allowed companies to go under and then started new ones; but the criminal courts are there to deal with that.
If the Government are convinced that there is a real problem, they must bring those people before a British judge and jury, and prove beyond reasonable doubt that they are guilty, in which case they should go to prison, or be fined, or both. We are about to enter another massive recession. How many companies will go under through no fault of their own? How many directors will wonder whether they will be liable for national insurance contributions and whether some civil servant will sit in judgment on them?
In the case in which I was involved, it was all very easy: we sat in a comfortable court in London, five years after the company had gone under. Do we remember what was happening in the coalfields five years ago? Debates were raging in the House and miners were losing their livelihoods. The directors' defence was that they were fighting to save the company.
The first defendant had put his whole life into the coal industry, but the company went down. The jury found that he must have known what was happening, and that although he might have been trying to save the company—which was in trouble, perhaps because of investment problems—he deliberately took the decision that the only way in which to save the business that he loved—he employed 150 people—was to close down the first company and leave the debts behind.
Was that defendant fraudulent, negligent or dishonest? All those issues were being determined five years later. What will happen to company directors in future? At least now they have the comfort of knowing, as they struggle with the difficulties of the marketplace, that the company may go down, but that they will not be dragged before a court and have their names besmirched in mud unless they have acted fraudulently. If they have not lied and cheated, they can rely on traditional British justice.
Company directors may be dragged to some secretive tribunal run by the Government, and forced to cough up tens of thousands of pounds and to lose the homes in which their wives and families live. They will have no traditional rights, no jury and perhaps no proper legal aid to help them to deal with the thousands of pieces of paper: if anybody thinks that modern companies are easy to investigate, they are deluding themselves.

Mr. Letwin: My hon. Friend raises another point, to which I did not refer earlier as I wished to bring my remarks, which were perhaps overlong, to a conclusion. Does my hon. Friend agree that the amendment makes it by no means clear, even in conjunction with the schedules, that the directors in question will be able to have proper legal representation at the tribunal?

Mr. Leigh: If that is so, I am absolutely horrified. If the Government tell those companies, which will undoubtedly go under in the next 18 months or two years, that they will be brought before the tribunal with no right to legal aid, that is frightening. It is simply not right. I therefore hope that my hon. Friend will press the Government on this matter. Given the complexity of the issue, it is impossible for people to defend themselves.
I think that I have made my point and need not weary the House further. I hope that I have shared with the House my practical experience of dealing with the issue this year, and have convinced some hon. Members of the practical difficulties. I am prepared to accept that the

Government are being entirely honourable, are rightly concerned about the curse of phoenix companies, and want to do something about it. We have been dealing with the same problem in the Crime and Disorder Bill. However, one cannot identify a social or moral ill in society and simply dispense with hundreds of years of traditional civil liberties and legal remedies. A short cut cannot resolve that issue, because that may cause more injustices and problems in the future. I therefore beg the Government to think again on this issue.

Mr. Denham: A number of important points have been made in this discussion. I recognise the support for action against phoenix directors. Companies that go insolvent with unpaid national insurance debts cost about £150 million a year, of which about £50 million is because of phoenix directors.
The hon. Member for Gainsborough (Mr. Leigh) spoke at some length. His impact on me may have been similar to the impact that he had on the jury in the case to which he referred, although he did not say which side of the case he was on.
I recognise the concerns that have been raised about the European convention on human rights, but we are satisfied that the Bill meets our obligations under that convention.

Mr. Letwin: I apologise to the Minister for intervening so early in his remarks, but he has repeated almost verbatim the words of his noble Friend the Baroness Hollis of Heigham, and has not exposed the logic. Can he now tell us exactly on what basis the Government are satisfied that the Bill is coherent with the European convention?

Mr. Denham: Hon. Members will have to make their judgment on this matter. Clearly, we seek advice on these issues, and Ministers must make a judgment on the right position. It is not unusual for officials to take decisions on behalf of the Secretary of State. The clause provides for cast-iron appeal rights where the onus of proof is on the Secretary of State. I shall return to that important point. As has been recognised, changes were made in the original proposals on those appeal rights, and those are now reflected in the amendments.
I reiterate that there is a further appeal right on whether the debt was originally due from the company. The personal liability notice will now stipulate not only the total unpaid debt and the amount being transferred to the individual concerned, but the proportion of the debt for which the recipient is held liable, to enable him to check the calculations used and show exactly what degree of culpability has been found to fall on him. Another important point is that it has been made explicit in the Bill that the onus of proof in any appeal under the provision falls on the Secretary of State rather than on the appellant.
That is an important point because it has been suggested that matters such as negligence are difficult to prove. That is why it is important to state in the Bill that the onus will be on the Secretary of State to establish that case.

Mr. Leigh: Will the Secretary of State have to prove those matters beyond reasonable doubt? Will the burden


of proof be the same as in a criminal trial, or will it be on the balance of probabilities, as in a civil trial? I suspect the latter.

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Mr. Denham: The balance of proof will be on the balance of probability at the tribunal, but it is worth making the point that the measure is a companion to the introduction of the offence of fraudulent evasion.
When the Contributions Agency identifies a director who is hiding behind the shield of limited liability and deliberately withholding the national insurance contributions deducted from his employees' wages, it will be able to choose the better course between transferring the debt and penalty to recover the money from the guilty person's assets, and taking a criminal prosecution, which could send the rogue or accomplices, such as a crooked accountant, to prison for up to seven years. Different alternatives would be available to the agency, depending on the situation it uncovered.

Mr. Letwin: I am grateful to the Minister who, with characteristic courtesy, has given way again. First, his answer to my hon. Friend the Member for Gainsborough (Mr. Leigh), so far as it was a clear answer—in part, it was—was very disturbing, and coherent with what I understand from the amendment.
Secondly, why should we believe that it would ever be the intention of the Secretary of State to use the criminal law to establish a fraud or a similar offence if he had open to him the avenue of establishing before a tribunal—two of its members would not be lawyers, and a lawyer for the defence may not be present—that neglect had occurred on the balance of probability?

Mr. Denham: I heard the points made by the hon. Gentleman in his opening remarks, but I do not accept his case. He claimed that a tribunal was the same as a criminal penalty. If a crime was committed and a prosecution taken, a person could be sent to prison for up to seven years. In serious cases, the appropriate action would be to attempt to ensure that such a serious penalty was imposed under the criminal law. The hon. Gentleman would agree that imprisonment for up to seven years would be a greater penalty than any charge levied as a result of the measures.
On the procedure, I make it clear that people would be able to bring legal representation to the appeal hearings. The Bill does not affect the legal aid provisions, which are properly dealt with elsewhere. We have guaranteed full protection, under an enhanced and suitably qualified and independent appeal system. There are clear precedents for the measures, notably section 61 of the Value Added Tax Act 1994, which places the burden of proof explicitly on commissioners of Customs and Excise when VAT penalties are transferred to directors of companies.
Serious and determined action is required where a director has neglected to carry out duties in respect of national insurance. Directors must understand that there is a clear obligation to deduct and pay over contributions.

Mr. Leigh: The Minister is dealing with the problem of neglect, but I press him further on what he means.

Are we discussing neglect in the general management of a company or in contributing national insurance contributions? I am sorry to weary the House, but in my experience, there is often extensive correspondence between Customs and Excise and directors concerning back payments of national insurance contributions. Customs and Excise and the Revenue authorities often deliberately decide not to over-press a company for payment, because that would close it down and kill the goose that may lay the golden egg. How would the specialised unit prove neglect, and would neglect relate only to payments or to the general conduct of a company?

Mr. Denham: The matters in the Bill clearly relate to national insurance matters.

Lords amendment agreed to.

Lords amendments Nos. 13 and 14 agreed to.

Clause 13

APPEAL TO APPEAL TRIBUNAL

Lords amendment: No. 15, in page 7, line 43, leave out ("prescribed circumstances") and insert
("relation to a prescribed decision, or a prescribed determination embodied in or necessary to a decision.
( ) Regulations under subsection (2) above shall not prescribe any decision or determination that relates to the conditions of entitlement to a relevant benefit for which a claim has been validly made or for which no claim is required.")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this, it will be convenient to discuss Lords amendments Nos. 16, 85 and 87.

Mr. Bradley: This group of amendments is our response to the Delegated Powers and Deregulation Committee report, which I am pleased to say generally concurred with our view about the necessity for the large number of regulation-making powers in the Bill. However, the Committee made a number of recommendations for changes and we have been able to meet its concerns in all cases.
Lords amendment No. 15 makes clear how the Department intends to use the regulation-making power in clause 13(2) to make certain decisions unappealable.

Mr. Waterson: I am grateful to the Minister for giving way so early in his speech. I hope that he has not lost sight of the Select Committee's recommendation in its 10th report, dated 14 January this year, that even changing to an affirmative procedure was not sufficient, at least in the context of clause 13(2).

Mr. Bradley: I regret having given way. If the hon. Gentleman listens to the rest of my explanation, he may find some comfort.
As I said, Lords amendment No. 15 makes clear how the Department intends to use the regulation-making power in clause 13(2) to make certain decisions unappealable. It explicitly prevents regulations from including any decision that relates to the conditions of entitlement to a benefit—in other words, it prevents them


from removing the right of appeal from an outcome decision. It clarifies that the power will be used only to prescribe administrative decisions, which do not carry a right of appeal at present.
Lords amendment No. 16 is technical and puts beyond doubt the circumstances that will attract a right of appeal under clause 11. Clause 11 deals with supersession of earlier decisions. Appeal rights will be granted where the Secretary of State acts on an application for a decision to be superseded, even if ultimately the amount of the award is not changed. If the Secretary of State acts on an application, a new outcome decision will be generated, whether or not the amount of benefit in payment changes.
However, in some cases, an application for supersession has no prospect of success because it is clear that there has been no relevant change in the customer's circumstances; for example, where a person tells us something that is irrelevant to the decision maker, or the application for supersession cannot possibly change the original decision. In those cases, it is not practicable or sensible for the Secretary of State to act on the application. Lords amendment No. 16 ensures that the decision not to act will not be a decision under clause 11 and will not attract appeal rights.
Lords amendments Nos. 85 and 87 make specified regulation-making powers in the Bill subject to the affirmative, rather than the negative, procedure. They make a direct response to recommendations in the report of the Delegated Powers and Deregulation Committee, which argued that it would be helpful to the House to have the opportunity for further debate on some of the key sets of regulations to be made under the Bill.
First, the new clause makes subject to the affirmative procedure three groups of regulation-making powers concerned with appeal tribunals. Clause 8(3) relates to the composition of appeal tribunals and the allocation of cases among differently constituted tribunals; paragraph 11 of schedule 1 provides for the delegation of certain functions of appeal tribunals to authorised officers—clerks to the tribunals; and paragraph 3 of schedule 5 contains the power to provide regulations for striking out or reinstatement of proceedings.
Secondly, the new clause also makes the powers in clause 13(2) and paragraph 8 of schedule 2 subject to the affirmative procedure. That change works in tandem with Lords amendment No. 15 to give further clarity about the Government's intentions towards the maintenance of existing rights of appeal.
Thirdly, the new clause permits regulations, also subject to affirmative procedure, to be made under clause 70. They will align rates of child benefit for lone parents and couples with children. We studied the Delegated Powers and Deregulation Committee's report carefully and found it extremely helpful. The Government are happy to accept that there are issues on which the detail in regulations will be of interest to the House, over and above our debate on principles during proceedings on the Bill. I commend the Lords amendments to the House.

Mr. Waterson: I congratulate the Minister on the sheer effrontery of his remarks. It is certainly true that the Minister listened, but, sadly, he did not listen to members of the Standing Committee. If he had, he would have heard my remarks, and those of my hon. Friend the Member for West Chelmsford (Mr. Burns) and numerous

other hon. Members. We told him time and again in words of one syllable that he was wrong, but he consistently refused to take our advice. Yes, he has listened—he deserves one or two marks out of 10 for that—but to the Select Committee, not the Standing Committee. He was brought up short by that Committee's swingeing criticisms, to which I shall return in a moment—[Interruption.] Sadly, the Minister is not listening to me at the moment, but I am resigned to that. I shall try to help him by speaking in words of one syllable.
A pragmatic approach is again being adopted. That is obviously today's theme. There will be no U-turn in the face of strong and well-worded criticism from the Select Committee, but a pragmatic approach: there is no more talk of a listening Government.
That said, there has been at least a partial vindication of the position taken by the Opposition in Committee. At the time, we might as well have gone fishing, or done anything other than tell the Minister that he was wrong. I recall the sub-plot that ran through the Committee stage—the mysterious case of the missing draft regulations. With his habitual courtesy, the Minister promised at an early stage that draft regulations would be produced for the Committee so that we could have at least a flavour of the type of regulations that he would impose under the Bill. We waited, and waited, and waited, but draft regulations came there none. Although we had saluted the Minister's desire to be helpful, the Committee became increasingly restive at having no chance to see draft regulations. Perhaps they were lost in the post; I do not know.
The effect of the amendments is clear. They reduce the scope of the regulations that the Minister defended so stoutly in Committee by giving a different definition to the words "prescribed circumstances". It is worth dwelling for a moment on points made in Committee, when the official Opposition consistently opposed the extensive regulatory powers in the Bill. My hon. Friend the Member for West Chelmsford said:
As we said on the first sitting, many of the changes will be made not by the Bill but through regulations, which I suspect we will not see in draft form during the proceedings of the Committee.
How right he was.
We are being asked to approve a pig in a poke because we will not know the small print of those regulations or the detail of how the Government will seek to use their powers."—[Official Report, Standing Committee B, 28 October 1997; c. 13.]
As I have said, the Minister, despite his best efforts, consistently failed to provide the Committee with the draft regulations.
The amendments amount to a significant U-turn on the Bill's regulatory powers. Quite properly, they fix certain limits on the regulations that can be made. In particular, the new provision after clause 75 provides that many regulations that flow from the Bill will be subject to affirmative resolution, which I called for in Committee.
In Committee, I also quoted some respected independent organisations that shared our view. Perhaps the most telling quotation, to which we returned more than once, came from the Child Poverty Action Group—not exactly regarded as a wing of the Conservative party—which referred to
the skeletal nature of the Bill".
I endorsed that description.
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The Law Society also gave us the benefit of its view, stating:
A further point of concern is that the Bill gives the Secretary of State extensive regulation-making powers, making it extremely difficult for Parliament and those affected by the Bill's provisions"—
and it is they who really matter—
to assess their impact or desirability. It is hoped that Ministers will be able to provide more detailed information in order to clarify their intentions during the passage of the Bill.
As we have heard, that was a pious hope.
Another briefing, from the Social Security Law Practitioners Association—judging from its title, it ought to know what it is talking about, and it represents people who act regularly for clients in social security matters—said:
We believe that the current grounds upon which a decision of an adjudication officer may be reviewed work well and that such grounds should be laid out in primary legislation."—[Official Report, Standing Committee B, 28 October 1997; c. 77–78.]
Again, the Minister felt unable to accept that point in Committee.
At that time, the Minister sought to defend his position partly on the ground that draft regulations would in due course be considered by the Joint Committee. He felt that that was a defence against regulations that would have too swingeing an impact on people affected by the Bill. I said that it was my privilege and pleasure during my first Parliament to serve as a member of the Joint Committee that scrutinises secondary legislation. The Minister said nothing to disabuse me of the view that he had failed to see the difference between scrutiny and control—which is an entirely different thing—as regards secondary legislation.
The plain truth is that the Joint Committee considers more than 3,000 instruments a year, covering the entire range of Departments. As is made clear in the rules prepared for the House by the Clerk, the Scrutiny Committee is concerned not with the merits of statutory instruments but with such matters as whether the authority conferred by the parent Act has been exceeded and whether the drafting is defective. That is totally different from what the Minister seemed to believe, which was that the task of the Scrutiny Committee is to consider the merits of individual statutory instruments.
As the Procedure Committee's fourth report, on delegated legislation, put it—rather well—the work of the Scrutiny Committee is painstaking and unglamorous and goes largely unregarded in the House. I heartily agree, but no matter how well its members do their job, they are not doing what the Minister thought they were there to do.
As the House knows, there are two procedures for dealing with statutory instruments—the affirmative and the negative procedure, although they have changed a little in recent years. At the moment, an affirmative instrument is automatically referred for debate to a Standing Committee unless the Government are willing to afford a debate on the Floor of the House.
The fourth report says that the Government may freely disregard negative instruments, although Ministers are in a position to concede the affirmative procedure in the course of debate on a Bill in Committee. That is precisely the point that we kept making to the Minister during our

Committee debates. It would have been perfectly possible to rethink the issue on the hoof and to accept that some—perhaps all—of these matters should be subjected to the affirmative procedure. As the second edition of "Statutory Instrument Practice" makes clear:
Negative procedure provides a less stringent form of parliamentary control than affirmative".
That is precisely the point that we debated time and again in Committee.
The Bill sailed through the Committee unencumbered by any draft regulations and went to another place. There it met an immoveable object, in the form of the Lords Select Committee on Delegated Powers and Deregulation. Its conclusions on the Bill deserve repetition. The 10th report states:
There is an exceptionally large number of delegated powers in this bill, and it is difficult to strike the right balance in relation to some of these powers.
The Committee touched on the need for flexibility, which the Minister did mention in Committee, but went on to say:
Some of the delegated powers in the bill break important new ground".
The Committee expresses profound reservations about the contents of the Bill without the Lords amendments. Let us not forget that the Committee exists
to report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate degree of parliamentary scrutiny"—
precisely the point that we made over and over again in Committee.
The Lords Select Committee took written evidence, not least from the CPAG and the National Association of Citizens Advice Bureaux. Given that those independent organisations agreed with the Opposition's concerns in Committee, the Minister should have given us a more serious hearing at the time.
The Committee went on to say of clause 13:
The Committee does not consider that affirmative procedure is the appropriate answer to its concerns about clause 13(2) … It is arguable that primary legislation should establish the essential rights of appeal in any area of the law … The Committee sees no objection to a power to confer additional rights of appeal … But as the bill stands there are no rights of appeal which could not be removed by regulations under clause 13(2) or paragraph 8 of Schedule 2. The Committee wishes to draw attention to this point, and invites the House to consider whether it is right that Ministers should have so wide a power to deny appeals from their own decisions.
Given that the Committee uses guarded and measured language, these are damning and devastating criticisms of the Department's approach to the Bill and its regulation-making powers. That point was so clear and obvious in Committee that I remain amazed by the fact that the Minister felt unable to recognise it. He has had a firm slap on the wrist from the Select Committee, but, far from coming here in a mood of contrition and apology for getting it so wrong, he has had the effrontery to try to take credit for what amounts to another massive climbdown—or "pragmatic approach". What a pity that that approach was not in evidence in Committee.

Mr. Swinney: It appears that the Government have put their case this evening, only to be confronted by a series of hurdles designed to make it difficult for them to change their position.
I want to speak to Lords amendment No. 87, a new clause. I welcome the fact that the affirmative procedure is to be used for the regulations made under the new clause. Bearing in mind the fears raised by the proposal to reduce benefit for lone parents, the public would be staggered if they believed that Parliament was not according to issues of such sensitivity the sort of scrutiny afforded by the affirmative procedure.
It is important to assure our constituents that regulations of this nature will be subjected to the closest possible consideration by the House. The public need reassuring that there will be such scrutiny of a variety of aspects of the legislation. They need to know that enough parliamentary time will be devoted to issues raised by the Government in future, whether they relate to changing the constitution of appeals tribunals or to powers to reduce benefits to lone parents. These are fundamental issues; if Parliament cannot devote the right amount of scrutiny to them, it will be failing in its duty to the public. That is why I welcome the Government's response to the Lords amendments.

Miss Kirkbride: I had the privilege of serving on the Standing Committee some time ago. Before being elected, I sat up in the Press Gallery as a journalist, and I can only describe what the Minister has said this evening as a U-turn. We should like more of them in other areas of the Bill; at any rate, the Government are eating a good deal of humble pie tonight, given what they said during that interminable Standing Committee—[Laughter.] It was my first experience of a Standing Committee, and the debates sometimes seemed rather long to me.
We are grateful that the Minister has listened to the concerns that we expressed in Committee. When the Bill was in Committee last autumn, it seemed symptomatic of the then new Government that they were arrogant enough to propose that these measures should be put through without proper scrutiny. We were often left in the dark, not knowing whether Ministers meant to employ the affirmative or the negative procedure—or indeed what they were proposing. It is important that the Government have now accepted that when we are spending a great amount of public money, the public should at least know where they stand with regard to appeal procedures and to other things that the Government were trying to slip in. I have many constituents who are concerned about their rights and the appeal procedures on the benefits that are available to them.
The regulatory framework must be made much clearer, so I am grateful for the U-turn that Ministers have made tonight. We should like more as we proceed, but I thank the Minister for his interest so far.

Mr. Keith Bradley: I find it extraordinary that the Opposition have the effrontery even to raise the issue of secondary legislation. Year after year when they were in government, they introduced skeletal Bills, such as the Jobseekers Bill, on which I am sure the hon. Member for Bromsgrove (Miss Kirkbride) reported in her former life, in which, as she will have noted clearly, most of the provisions were in secondary legislation. The file of

papers on secondary legislation was 10 times thicker than the Bill itself, so we will take no lessons from the Opposition.

Mr. Waterson: Will the Minister give way?

Mr. Bradley: No, I am making my point. We understand that there is a reshuffle in the air on the Opposition Benches.
We were not brought up short by the Delegated Powers and Deregulation Committee because it accepted our principle that most of the detail should be in regulations. Out of more than 100 regulation-making powers, it commented only on five. It vindicated our assertion in Committee that the structure in the Bill was right and the use of powers was appropriate.
Yet again, the hon. Member for Eastbourne (Mr. Waterson) is confusing that Select Committee with the Joint Committee on Statutory Instruments, which he continually refers to. They are different. The Select Committee looks at whether we have appropriate powers, whereas the Joint Committee looks at specific regulations and decides whether those powers are being exercised appropriately. It has not looked at regulations yet in this respect. The comments are appropriate in relation to the fact that the Select Committee examines the generality of the use of powers.

Mr. Waterson: I thank the Minister for giving way because we may be able to save a bit of time by my intervening at this stage. I am well aware of the difference that he mentions because, of course, I served for some four or five long years on the Joint Committee, but my recollection of the Standing Committee is that, at one point, he was trying to defend the Bill as it stood by saying that the regulations would be considered in due course by the Joint Committee. I do not think that he fully appreciated or had a complete grasp—I may be doing him an injustice, in which case he will put me right—of the narrow compass of the Joint Committee's responsibilities.

Mr. Bradley: We are in danger of compounding the confusion and the difference of view that we had in Committee—and still do—even further. The Committee that I was referring to was the Select Committee, which scrutinises the generality of the powers. The hon. Gentleman refers to the Joint Committee on Statutory Instruments, which considers these matters only when it has such instruments before it and examines whether those powers are being used appropriately. There was confusion in Committee on that point, and there continues to be.
What is important is that when regulations are laid—we have to recognise that this is a long and technical Bill—they are correct. If they are not, we would only be criticised again for having to amend or replace them and, again, the Opposition would say that we had not done our job properly. As we have made clear, we shall also use the ad hoc group on implementation, which will help us to implement the Bill. Representatives from the Child Poverty Action Group, the National Association of Citizens Advice Bureaux and Age Concern, for example, are serving on that group, so their views will be taken into account as the Bill is implemented.
I am sure that we have noted the general welcome from hon. Members on both sides of the House for my announcement on statutory instruments. It would be wrong to delay the House any further by not approving them.

Lords amendment agreed to.

Lords amendment No. 16 agreed to.

Clause 14

REDETERMINATION ETC. OF APPEALS BY TRIBUNAL

Lords amendment: No. 17, in page 8, line 26, leave out ("shall") and insert ("may")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to take Lords amendment No. 18.

Mr. Bradley: Amendment No. 17 allows a tribunal chairman, who is considering an application for leave to appeal against a decision of a tribunal, the discretion either to set aside that decision and refer it back to an appeal tribunal, or to grant leave to appeal to a commissioner. As clause 14 is currently drafted, the chairman would be required to set aside an erroneous decision and refer the case for redetermination by a tribunal.
Concerns were expressed in another place that a chairman would be required to set aside an erroneous decision even where he had been outvoted at the tribunal on the same issue, which could place him in a difficult position.

Mr. Burns: On a point of information, will the Minister confirm that, notwithstanding what he has just said about this issue being raised in another place, it was also raised in the Committee upstairs in this House?

Mr. Bradley: I cannot confirm it in the sense that I do not have Hansard in front of me, but I am sure that the hon. Gentleman must be referring to some comment that he made in Committee and I would not in any way wish to undermine that position. If he now wishes to take credit for the amendment, again, we are all on the same side on this one.

Mr. Burns: The Minister is right in his surmise. It was raised in the Committee of this House, so will he tell the House: if it was so compelling an argument in another place, why did he not listen and why was it not compelling in Committee?

Mr. Bradley: If we go down that route of argument, there would no point us discussing these amendments and the Government laying out their position on accepting them. The parliamentary process is a total process: through Second Reading, Committee, the Lords and back again. Throughout that process, not just in parts of it,

we are a listening Government. I am pleased that we have listened very carefully to the arguments throughout that process and have come to a conclusion on them.

Mr. Burns: rose—

Mr. Bradley: I wish to make progress. I do not think that we need to make a fuss about nothing on this point.

Mr. Burns: If the Minister gives way, it will save me having to make a speech

Mr. Bradley: In that case, I am only too delighted to give way.

Mr. Burns: I will keep to my commitment, as the Minister has generously given way. If he is part of such a listening Government and the legislative procedure is an on-going complete sequence of events, why did his Government not listen to the message that was being sent on single parents in the vote last December? Why does he cherry-pick which issues he is going to listen to and claim the credit for listening to?

Mr. Bradley: rose—

Mr. Deputy Speaker: Order. Let us keep to the subject that is before us.

Mr. Bradley: Thank you, Mr. Deputy Speaker. I completely agree with your ruling on that point.
Concerns were expressed in another place that a chairman would be required to set aside an erroneous decision even where he had been outvoted at the tribunal on the same issue, which could place him in a difficult position. The Government have considered the matter further and have made appropriate amendments to ensure that the chairman has the option to refer cases back to a tribunal for determination.
Amendment No. 18 is consequential on the amendment to clause 14(2). It ensures that a decision will always be set aside and referred for redetermination wherever the principal parties agree that a decision is erroneous in point of law. Without the amendment, it would not be clear whether the chairman could override their request if he agreed that there was an error of law and were to exercise his discretion, under the amended subsection (2), not to refer the case for redetermination.
These are sensible provisions and I commend the amendments to the House.

Lords amendment agreed to.

Lords amendment No. 18 agreed to.

Clause 15

APPEAL FROM TRIBUNAL TO COMMISSIONER

Lords amendment: No. 19, in page 10, line 19, leave out ("The Lord Chancellor may by regulations") and insert ("Regulations may")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 20 to 26, 83, 84, 86, 114 and 123.

Mr. Bradley: Amendments Nos. 19, 20, 21, 83, 84 and 86 ensure that the Lord Chancellor retains the necessary regulation-making powers that he currently has in respect of proceedings before commissioners.
Amendment No. 24 allows the presiding social security commissioner to have a casting vote where there is an equal division in votes. Amendments Nos. 22, 23 and 25 relate to the handling of applications for leave to appeal to the social security commissioners. The amendments will allow the chief commissioner to direct that such applications be considered by a tribunal of commissioners.
In recent years, there have been instances where an application for leave to appeal and its determination were crucial to a number of other applications. In those cases, determination by a tribunal of commissioners would help to ensure clarity and consistency in the application of the law. Such a power is likely to be exercised infrequently by the chief commissioner—perhaps no more than two or three times each year—but it offers clear benefits for the development of social security law.
Amendments Nos. 26, 114 and 123 are technical. They ensure that the Bill contains provisions for decisions on child support and vaccine damage payments to be final, and for findings of fact contributing to decisions on child support and vaccine damage to be made conclusive by regulations for the purposes of further such decisions. This mirrors provisions already made for social security benefits. The amendments also ensure that such findings of fact can be made conclusive across all the Department's business areas.
I commend the amendments to the House.

Mr. Burns: I should be grateful for some straightforward clarification on some of the amendments. I have no problems with what the Government are seeking to do, having read the Hansard from the other place with great care. However, there are some confusing points of fact and I would appreciate it if the Minister could elaborate on them. If he would prefer to do so through interventions to save time, that would help our proceedings.
My understanding is that in the original drafting of these clauses the Lord Chancellor was given various regulation-making powers. He had the power to make regulations defining what could and what could not be appealed from an appeals tribunal to a commissioner. Unless I am wrong in my understanding of the proceedings in another place, on Report the references to the Lord Chancellor's powers were removed. What is causing me particular concern—because I do not understand how it dovetails with the Minister's remarks—are the Lord Advocate's comments on 20 April. He said that
references to the Lord Chancellor's regulation-making powers in Clauses 14 and 15 are no longer necessary."—[Official Report, House of Lords, 20 April 1998; Vol. 588, c. 984.]
Perhaps the Minister could elaborate whether that has happened because of some drafting requirement as a result of amendments to the Bill, or because there has been a change of heart.
That leads me to two other points of clarification. The Minister may say that the Government have had to make some of the changes as a result of the Scotland Bill. Indeed, that issue arose when we discussed the first group of amendments today. Changes had to be made to the Bill because the Minister rather perspicaciously claimed that he wanted to get it right and was therefore withdrawing parts of the Bill until there was clarification of the consequences of the Scotland Bill when it became law.
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Why have those powers been removed from the Lord Chancellor? If it is not because of a technicality or drafting issues, what is the reason? Why were they withdrawn at the time that they were? I ask that not to be obtuse, but when we were scrutinising the Bill in Committee in this House the Scotland Bill had already been published, so the Government must have been aware of any potential problems or any desire to seek clarification.
I have been wondering why there was no attempt to make these changes in Committee or on Report in this House. This may not be connected, but was it anything to do with what was happening at the other end of the building with regard to the Lord Chancellor? Perhaps the Government did not want to give any more ammunition to the press—a stick to beat the Lord Chancellor with—given his problems with the redecoration of his apartment with taxpayers' money—

Mr. Deputy Speaker: Order. I do not expect the hon. Gentleman to raise that subject on this group of amendments.

Mr. Burns: You are absolutely right, Mr. Deputy Speaker. I certainly do not want to stray into that controversy or open old wounds. I was just, in passing, wondering whether that incident had any bearing on the timing of the Government's proposal to change the Bill. No doubt the Minister, who is in listening mode, will have heard my point and will want to clarify the issue—within order and without causing any problems for the Chair—when he replies.
The hon. Member for Cardiff, West (Mr. Morgan)—who used to be a Labour Front-Bench spokesman, but who failed to find a place in the first Administration and now sits on the Back Benches—suggested that perhaps the country did not really need a Lord Chancellor at all. That was a slightly off-message line to take. Perhaps that, too, has some bearing and the Government are chipping away at the Lord Chancellor's powers through these amendments.
If the Minister, as a matter of information, will fully clarify these points so that we can understand what we are being asked to approve, I shall be eternally grateful.

Mr. Keith Bradley: I will cut away all the verbiage and get to the clarification of the amendments that the hon. Gentleman seeks. I hope that he will find comfort in it.
The Lord Chancellor is currently given the power to make procedural regulations with respect to proceedings before commissioners through section 189(2) of the Social Security Administration Act 1992. He is required by section 189(10) to consult the Lord Advocate before making regulations under the Administration Act. Both subsections are repealed by the Bill.
Amendment No. 84 re-enacts those provisions to allow the Lord Chancellor to continue to be able to make regulations in respect of proceedings before commissioners after consulting the Lord Advocate. Such regulations may relate to the determination of any matter by commissioners, or leave to appeal to, or from, the commissioners.
Therefore, Lords amendment No. 84 makes references to the Lord Chancellor's regulation-making powers in clauses 15 and 16 unnecessary. Lords amendments Nos. 19, 20, 21, and 83 remove references to the Lord Chancellor, in clauses 15(11) and 16(6), and consequentially amend clause 75(1).
I am sure that that explanation clarifies the position, and that the hon. Member for West Chelmsford will be happy to accept those Lords amendments.

Lords amendment agreed to.

Lords amendments Nos. 20 to 26 agreed to.

Clause 22

SUSPENSION IN PRESCRIBED CIRCUMSTANCES

Lords amendment: No. 27, in page 14, line 31, leave out subsection (4)

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 28 to 30 and 71.

Mr. Bradley: Lords amendments Nos. 27, 28, 29 and 30 clarify the circumstances in which entitlement to benefit may be terminated following a suspension of payment of benefit. Clause 22 contains provisions to suspend payment of benefit when a doubt arises about whether a person is entitled to benefit, and to terminate entitlement following suspension. The intention has always been that entitlement will terminate only when someone fails to comply with an information requirement that the Secretary of State imposes to resolve the issue that led to the suspension. The amendments make that limitation explicit in the Bill, in response to concerns expressed in another place.
Lords amendment No. 71 relocates clause 59 into the section of the Bill dealing with "benefits". Currently, the clause is incorrectly located in the section of the Bill dealing with "contributions". The amendment rectifies a technical error in the current draft of the Bill.
I commend the amendments to the House.

Lords amendment agreed to.

Lords amendments Nos. 28 to 30 agreed to.

Clause 27

RESTRICTIONS ON ENTITLEMENT TO BENEFIT IN CERTAIN CASES OF ERROR

Lords amendment: No. 31, in page 17, line 28, at beginning insert ("Subject to subsection (1A) below,")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 32 to 37, 52 to 58, 138 to 141, 143 and 145.

Mr. Bradley: Clause 27 contains provisions to deal with restrictions on entitlement to arrears of benefit

following a decision by a commissioner or court which reinterprets the law in a particular area. The clause replaces and clarifies sections 68 and 69 of the Social Security Administration Act 1992.
Lords amendments Nos. 37 and 58 clarify the fact that restrictions on payment of arrears will apply regardless of whether a claim or application is made before or after the date of the relevant determination. The other amendments in the group will ensure that the provisions of clauses 27 and 44, and paragraph 47 of schedule 6, comply with European Community law and with the European convention on human rights.
As originally drafted, the provisions would have required that only the person involved in the lead case—the case that leads to a reinterpretation of the law by a commissioner or a court—would have any increase in their benefit entitlement paid without any restriction. All others who are affected by the new interpretation of the law would have had any increase paid from a common date set—the date of the determination in the lead case.

Mr. Burns: In the light of debates on the Bill in another place, why is the Minister so confident that the provisions will comply with the requirements of the European Court of Human Rights? On what evidence has he based that conclusion?

Mr. Bradley: I am confident—because of the thorough-going nature of the debates in the other place, and the expertise that has been applied to the matter both there and within my own Department—that the assurances that I have given will be complied with. If the hon. Gentleman has doubts on the validity of that statement, I should be very grateful if he will say how he thinks it is defective. If I am not able now to deal with his specific point on how it is defective, I shall certainly write to him about it.

Mr. Burns: On that specific narrow point, will the Minister confirm whether he has had specific meetings with officials to discuss the issue?

Mr. Bradley: I should certainly not be commending the amendments to the House if I were not satisfied, through my officials, that the information that I am providing is correct. I say again that, if the hon. Gentleman believes that there is any defect in my statement, I should be very happy to hear what it is. In the light of that information, we will reconsider the matter, and I shall write to him with a detailed response. However, he has not yet given me any details of a problem. If he wishes to record in Hansard the problem that he perceives in the statement, perhaps we will be able to deal with it.

Mr. Burns: I should like to clarify one point. In no way was I suggesting that the Minister might be less than straightforward. I should hate for him—perhaps inadvertently, in his comments—to put that on the record. I have no doubt about the Minister's integrity. However, in debates in the other place, there was a great difference of opinion and confusion about the extent and accuracy of the provisions' compliance—when it comes to the crunch—with requirements. I was simply wondering whether the Minister has more information on that matter.

Mr. Bradley: No. I merely repeat the point that—as the hon. Member for West Dorset (Mr. Letwin) is only


too aware—all legal matters are always open to interpretation. I believe that the amendments will ensure compliance with European law. I am not suggesting that I am an expert in the field; I rely on advice on those matters. If the hon. Member for West Chelmsford (Mr. Burns) or any other Opposition Member thinks that there is a specific defect that I am not dealing with, I should be grateful to be told what it is. I shall deal with the point in writing, and try to provide further assurance. Conversely, if the information shows that we should reconsider the matter, that will be done.
In no sense am I trying to mislead the House. I am merely trying to state what we believe to be the case. The matter has been considered both in the House and in another place, and I am moving and speaking to the amendments on that basis.
The amendments will ensure that restrictions on arrears will not apply to other cases that are being appealed or to claims or applications that are held up by the Secretary of State while awaiting the outcome of lead cases. I say again that I believe that the provisions are in compliance with the requirements of European Community law and the European convention on human rights—although I should be happy for the matter to be debated further if there are views to the contrary.
With those assurances, I commend the amendments to the House.
Lords amendment agreed to.
Lords amendments Nos. 32 to 37 agreed to.

Clause 38

REVIEW OF DECISIONS

Lords amendment: No. 38, in page 24, line 12, after ("relates") insert—
("(aa) may review such a determination on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact;")

Mr. Denham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 39 to 43, 79, 80 and 92.

Mr. Denham: These are technical amendments to clauses 38 and 73, which deal with the social fund. Although they are essentially drafting changes to clarify matters that the House has already discussed, it may assist the House if I briefly remind hon. Members how the social fund measures in the Bill fit together to form a coherent package of improvements.
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The simplification of budgeting loans in clause 69, the ability to recover social fund overpayments in clause 73, and their associated review procedures in clause 38 all represent further significant steps towards our goal of achieving an active, modern service. Their combined effect will be to make the social fund system more user friendly for the customer, more efficient for staff to administer and more secure for the taxpayer.
Amendments Nos. 38, 39 and 41 to clause 38 clarify the review procedure for dealing with discretionary social fund overpayments. Amendments Nos. 40, 42 and 43 are consequential technical changes, which again ensure that "appropriate officers" and social fund inspectors need only follow the special review procedures when they are reviewing determinations on the grounds that the applicant misrepresented or failed to disclose information. I should make it clear that nothing in these amendments affects the applicant's right to apply for a review, either of the original determination in his case or of the determination that there has been an overpayment.
Amendments Nos. 79 and 80 are technical amendments to clause 73. Amendment No. 80 tidies up the legislation, and amendment No. 92 ensures that the new discretionary social fund review procedures to support the budgeting loans scheme and the recovery of overpayments can be operated by social fund officers before the introduction of appropriate officers under part I of the Bill.
As a result of the measures in the Bill and of the amendments before the House, the social fund will in future be simpler to understand and more cost-effective to administer; it will also be seen actively to support people back into work, and be based on integrity and honesty.
I commend the amendment to the House.

Mr. Letwin: I shall attempt to remember that you are in the Chair, Mr. Deputy Speaker, and that I begin my remarks with you in the Chair, rather than in the presence of Madam Speaker.
This set of amendments constitutes a set of dogs that have not barked or a set of Ministers who have not listened—an extreme example of the latter phenomenon, I fear. Clause 38 was much debated in Committee. It was perhaps not as well debated by the Opposition as it should have been because it was I who spoke. However, having read my remarks, I find that although they were not as elegant or eloquent as perhaps they should have been, they had the great merit of being true. They remain true, alas, because nothing has been done to remedy the great deficiencies that were then observed in clause 38, which are indeed symptomatic of the deficiencies that run through the Bill, to which attention was also drawn many times by my colleagues and which were also highlighted in another place.
Let us first consider clause 38(1)(a). It states that a review of a social fund determination shall be made
within such time and in such form and manner as may be prescribed".
The Minister may recall that, with some assistance from the hon. Member for Newbury (Mr. Rendel), we drew attention to the question whether there ought to be a time limit which, as the Minister made clear, would have affected the length of time that the Government could take before they instituted a review without an application from a customer.
On that occasion, the Minister took no heed of the request. We are told that this is a listening and pragmatic Government, so one would have expected that between the time of our debates in Committee and the Bill entering another place, Ministers would have had time to reconsider and would have seen the justice of a 28-day time limit, in those circumstances at least. No such luck—unless my eyes deceive me, there is not the slightest reference to a time limit in the multitude of amendments


to clause 38. No luck, no listening, no pragmatism. That will affect individuals who will find themselves being reviewed, perhaps long after the fact, without any means of responding—unless the Government do exactly what the Minister said they would do when the issue was raised in Committee.
The Minister said:
We have made clear our intentions in Committee".
By that he meant:
In the majority of cases, 28 days will give claimants ample time".— [Official Report, Standing Committee B, 18 November 1997; c. 367.]
He made it clear that he intended to introduce regulations that would set a 28-day limit.
We are now in an extraordinary situation. The Minister accepted the justice of the claim that there ought to be a time limit and said that he would bring forward regulations to deal with it, but, in the intervening months, he has not put before this House or their lordships a draft—

Mr. Deputy Speaker: Order. What the Minister has failed to do is not the matter before us. The hon. Gentleman is bringing to the debate matters that have nothing to do with the amendments.

Mr. Letwin: Clearly, I would not wish to challenge your ruling, Mr. Deputy Speaker, but I think it is material to the amendments before us to say that they fail to have the effects that they could and should have had if the Minister were the representative of a listening Government. However, I move on in order to avoid—

Mr. Deputy Speaker: Order. I like to be helpful to hon. Members. When making his case, the hon. Gentleman should make a connection with the Lords amendments. If he ties the amendments into his argument, it will be all right.

Mr. Letwin: I am very grateful to you, Mr. Deputy Speaker. As a relatively new Member, and as someone who is very new to a brief sojourn on the Front Bench, I shall pay great attention to your suggestions and requirements.
I deal now specifically with amendment No. 38. Clause 38(1)(b) states that a Minister may review a social fund determination
in such other circumstances as he thinks fit.
It was not quite with the "wild surmise" of Cortez that I came across amendment No. 38, but it was with a slight beating of the heart in anticipation of finding that, after long rehearsals in Committee, the Minister would indeed bring forward in amendment No. 38 an answer to precisely the terrible problems caused by that part of the clause. In Committee, I said:
What an extraordinary concept in such a context—the power is completely unconstrained."—[Official Report, Standing Committee B, 18 November 1997; c. 365.]
We went on to observe that we could very well have had before us a Bill that simply said that the Minister may do anything in such circumstances as he thinks fit, and that it would have been a very much shorter Bill than this

extremely long one and could have saved us from much further consideration, but it would not have been in accordance with the way things are done under the British constitution.
I came to amendment No. 38 thinking that it would solve the problem because it adds to the clause a precise provision relating to the review. It allows a review to take place
on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact".
The problem is that amendment No. 38 in no sense replaces clause 38(1)(b). Unless I am much mistaken, it adds still further licence—and that is an extraordinary thing to do.
Clause 38 provides an unconstrained power of review—without the constraint of circumstances or even an objective test of the constraint of circumstances. The Minister said in Committee:
we cannot achieve the degree of flexibility that we want when detailed provisions are set out in primary legislation".— [Official Report, Standing Committee B, 18 November 1997: c. 367.]
In pursuit of that flexibility, the Minister drafted clause 38(1)(b), giving himself an absolutely open field. Then, presumably, one of his officials—I cannot imagine that he dreamt it up himself—suggested that there might be just a scintilla of doubt about whether at some time it might be necessary to do something that the wholly unconstrained power provided in clause 38 might not allow in an iron-cladded way without challenge from judicial review. I can only imagine that some brilliant, imaginative, ingenious lawyer in his Department suggested the possibility that some judge might be so steeped in the arcana imperii that he could find the basis for judicial review of a Minister's review of a determination in circumstances that he thought fit, but somehow avoided falling within the letter of the law. As a result, we have a majestic additional provision that the Secretary of State
may review such a determination on the ground that the person who applied for the payment to which the determination relates misrepresented, or failed to disclose, any material fact".
To any ordinary layman, amendment No. 38 is wholly unnecessary. It expands what is already astonishingly wide licence. However, when one considers it further, the position gets worse. We have failed utterly in our repeated efforts to understand what concrete circumstances the amendment addresses that are not addressed by clause 38(1). We continue to wrestle with the problem, but we are utterly defeated.
If a determination had been made and the applicant had misrepresented or failed to disclose a material fact, any rational Minister would think it fit to review the determination. I cannot imagine any circumstances on the face of the earth that would make it more plausible for a Minister to think it fit to review a determination than if someone had made an application and then failed to disclose or misrepresented a material fact. I bow to the Minister's immense imagination, of which I have had personal experience on numerous occasions in the House and outside, and ask him whether he has been able to dream up a circumstance in which he would not think it fit to review a determination if the applicant had failed to disclose or misrepresented a material fact. I do not anticipate his being able to provide such an explanation,


because I do not believe that an ordinary human being can furnish one—not even someone as brilliantly imaginative as the Minister.
We have to ask why the amendment was introduced in another place. I was defeated by that, so I spent some time investigating the Official Report there. Earnestly, as a seeker after truth, I tried to find out from the Official Report in another place what was the logic that underlay this wholly mysterious clause. Perhaps there was a completely different logic, which revealed a vast new array of concerns that did not arise in Standing Committee. After all, the Minister had plenty of opportunities to introduce such an amendment in Committee. Surely something must have happened in the intervening period that revealed to the Minister the necessity for such a bizarre amendment. Astonishingly, the Official Report in another place does not reveal the slightest trace of an explanation for the amendment. It is most puzzling.
Unlike our previous debate about phoenix companies and their directors, where a gross abuse of constitutional and jurisprudential precedent has been perpetrated and the House will have cause to be ashamed of itself, amendment No. 38 does not matter in that human sense—at least, I hope not. It is simply a case of bad legislation that provides belt and braces and will probably undo itself in the process. Probably what will happen is that some lawyer, perhaps looking back at our debates, but perhaps not, will struggle desperately to find out how clause 38(1)(b) relates to what will become clause 38(1)(c) and make sense of it and, as a consequence, the full force of the clause will be modified in court.
6.15 pm
If the right hon. Member for Llanelli (Mr. Davies) were here, I am certain that he would be able to offer us guidance as he has done previously in Welsh debates. However, I cannot speculate about that. If we have what appears to be a very bad overlap—an unnecessary paragraph—the Minister should offer to remove subsection (1)(b)—that would be marvellous—or, which would be less good, not to insert amendment No. 38. The two together certainly make no sense whatever.
Finally, I refer briefly to amendment No. 41. The Minister has described it as a technical amendment; in a sense, it is. It tells us that, in making a determination, an inspector shall
act in accordance with any general directions…and…take account of any general guidance".
I am not suggesting that all hell will break loose as a result of amendment No. 41—manifestly not. Probably the great majority of people will never hear of amendment No. 41. I suppose, alas, that most people will never hear of amendment No. 38 or clause 38 or indeed of me or my speech.

Mr. Burns: Nor will most people here.

Mr. Letwin: Indeed, as my hon. Friend points out, nor will many hon. Members. Yet amendment No. 41 enshrines rather a horrible principle that is all too familiar to those of us who sat through the interminable hours of debate in Committee. My hon. Friend described them as pleasurable, and they were from time to time, but only due to the charm of the Ministers and not to the charm of

the legislation. We frequently found an extreme predisposition towards generality in respect of regulation-making powers and powers of review and determination. Here we find that generality in the very language of the Bill.
Amendment No. 41 refers to "general directions" and "general guidance". I do not know why the word "general" is included. I do not know what the Minister and his officials think would have been lost in the drafting of the amendment had it stated that "an appropriate officer or social fund inspector shall act in accordance with any directions issued by the Secretary of State and take account of any guidance issued by the Secretary of State." However, I know that words are not included in legislation introduced by any Government without a particular purpose. As the meaning does not require the term "general", it must have been included for a particular purpose. I take it that it is there to allow the Secretary of State to give guidance or direction on topics wholly unrelated to the determination of a review and to allow an appropriate officer or social fund inspector to have regard to a variety of issues that the applicant might have considered wholly irrelevant. If that is the purpose—the Minister is more than welcome to clarify the issue in an intervention or in his reply to the debate—it is quite sinister. I am sure that the Minister does not intend any ill to befall people.
Ministers will be aware, from many cases before the Benefits Agency, that citizens advice bureaux repeatedly find that, because of the bewildering array of other regulations, directions and guidance, innocent, ill-informed applicants experience treatment that they had not anticipated. If the inclusion of the word "general" is to permit exactly that kind of articulation, it is, to put it mildly, regrettable.
I have laboured—undoubtedly, looking at the faces of Labour Members—

Mr. Keith Bradley: Look at the Opposition Benches.

Mr. Letwin: I assure the Minister that I would be amazed if I found a great army behind me.
I have laboured mightily over the amendments, but I believe, difficult as Ministers may find it to credit, that it matters how legislation is worded. It matters whether the general power given to the Secretary of State by legislation has been appropriately constrained. It matters whether the clauses overlap. It matters whether individuals, when they apply for benefits, are clobbered by provisions that they have never heard of because a clause they have never heard of gives the Secretary of State a power that no rational human being would want included in a Bill, which got through the House of Commons because nobody mentioned it.
I hope that this listening, pragmatic Government will now see fit to make minor adjustments, to bring the Bill back into line with common sense.

Mr. Denham: There are several reasons why I hope that the hon. Member for West Dorset (Mr. Letwin) never becomes a Social Security Minister, one of which is the danger that he would face of having so many of his speeches on this matter read back to him.
Amendment No. 41 has been drafted to be consistent with the wording and construction of the legislation introduced by the Conservative Government in 1986 and


consolidated in 1992. I accept that the hon. Gentleman has sincere reservations about the way in which regulations are drafted, but the form and wording of the amendments are consistent with previous practice, which was followed by Conservative Governments.

Mr. Letwin: I thank the Minister for his characteristic patience in giving way. First, I do not take responsibility for previous practice, which is long running and dates back to earlier Governments than the previous one. Secondly, I hope that the Minister will not advance the argument that this matter is like public expenditure: the Government can do anything wrong as long as the practice is consistent with that of a previous Government.

Mr. Denham: I shall cover the other substantive points—

Mr. Burns: Answer this point first.

Mr. Denham: It is fair to say that the drafting of legislation should—unless we can find reason to change it—reflect existing legislation on the issue. When considering the Bill, we found no reason to change the form of wording used in the Act.
In his second set of questions, the hon. Member for West Dorset asked me to explain the purpose of the group of amendments. We are dealing with reviews that are necessary because there has been misrepresentation or failure to disclose a material fact. The current position in law is that if a discretionary social fund overpayment results from misrepresentation or failure to disclose a material fact, the amount cannot be recovered unless the customer voluntarily agrees to repay it or civil action is taken against him. Discretionary social fund overpayments are often relatively small sums, and civil action is not always cost-effective. That means that overpayments are being written off, which allows people to profit from fraud. The intention of clause 73 is to close the loophole in the primary legislation.
We want to amend clause 73 because, although it introduces the express provision to allow the Secretary of State to recover such overpayments when a determination has been made, it does not provide the power to determine that an overpayment has occurred or to quantify it. The intention is to amend clause 38 to make it explicit that appropriate officers will determine that an overpayment has occurred and decide the amount to be recovered.
If I understood the hon. Gentleman correctly, he seeks clarification on why the amendments are necessary. They are necessary to enable the Bill's purpose—which we discussed in Committee—to be carried out.

Lords amendment agreed to.

Lords amendments Nos. 39 to 44 agreed to.

Clause 42

CHILD SUPPORT: APPEALS TO APPEAL TRIBUNALS

Lords amendment: No. 45, in page 27, line 5, at end insert ("against the refusal")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 46 to 51, 102, 120, 122, 124, 129, 130, 133, 134, 136, 137, 142, 144 and 175.

Mr. Bradley: Amendments Nos. 45 to 51 and 120 make minor changes to the provisions for child support appeals in clause 42 and schedule 6.
Amendments Nos. 102, 122, 129, 130, 133, 134, 136, 137, 142 and 144 clarify the appeals process for decisions on child support that are not directly part of the formula assessment. Amendments Nos. 124 and 175 allow for regulations to provide further appeal rights if they prove necessary.
When a tribunal considers a departure application, the discretionary nature of the decision means that a slightly different procedure is followed from the one for other appeals. Amendments Nos. 133 and 136 insert a provision that ensures that the same procedures are followed for departure appeals as at present.
In addition, amendments Nos. 133, 136 and 102 clarify the rules for appeals against reduced benefit directions. The Bill gives two rights of appeal against the benefit penalty imposed when a lone mother refuses to co-operate with the Child Support Agency without good cause. The amendments remove that dual provision, but ensure that parents with care can still appeal against the decision to impose a reduced benefit direction, based on the application of child support law to their case.
Amendments Nos. 122, 129, 130, 134, 137, 142 and 144 deal with appeals against the contribution to maintenance paid by some non-resident fathers who claim benefit. The Bill contains no right to appeal against such decisions, and the amendments correct that omission.
I commend the amendments to the House.

Lords amendment agreed to.

Lords amendments Nos. 46 to 58 agreed to.

Clause 45

VACCINE DAMAGE PAYMENTS: DECISIONS SUPERSEDING EARLIER DECISIONS

Lords amendment: No. 59, in page 32, line 25, at end insert—
("( ) Such notice as may be prescribed by regulations shall be given of a decision under this section.")

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendment No. 60.

Mr. Bradley: These technical amendments relate to the vaccine damage payments scheme. I hope that hon. Members will allow me to present them as a set rather than individually.
Amendment No. 59 is a minor amendment to clause 45. Clause 45 inserts a new section 3A into the Vaccine Damage Payments Act 1979. In effect, it replaces section 5, which deals with reconsideration of


the Secretary of State's decision on a claim for a vaccine damage payment, and ensures that there continues to be provision for claimants to be notified of decisions.
Amendment No. 60 is an amendment to clause 46. It allows the Secretary of State to make regulations on the procedures to be followed by appeal tribunals that hear appeals against vaccine damage payment decisions.
I commend the amendments to the House.

Lords amendment agreed to.

Lords amendment No. 60 agreed to.

Clause 50

PAYMENTS TREATED AS REMUNERATION AND EARNINGS

Lords amendment: No. 61, in page 34, line 19, at end insert—
("(0 A) After subsection (5) of that section there shall be inserted the following subsection—
(6) For the purposes of section 3 above regulations may make provision for treating as remuneration derived from an earner's employment any amount on which the earner is, by virtue of any provision of sections 140A to 140H of the 1988 Act, chargeable to income tax under Schedule E in respect of an acquisition of shares or an interest in shares."")

Mr. Denham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 62, 63, 93 and 94. I should inform the House that Lords amendment No. 61 involves privilege.

Mr. Denham: The amendments enable us to mirror, in national insurance, changes to the income tax treatment of shares carrying a risk of forfeiture and of convertible shares, as announced by my right hon. Friend the Chancellor of the Exchequer in his Budget.
The amendments provide for regulations to treat as earnings any amount on which the earner is chargeable to income tax under the provisions of sections 140A to 140H of the Income and Corporation Taxes Act 1988. That would allow for regulations to treat as earnings, for national insurance, gains derived from share ownership taxable under provisions to be introduced in the Finance Bill. The Finance Bill changes give business legislative certainty about the tax position. Similar changes are needed for national insurance purposes.
Part of our aim of modernising national insurance is that, where it is sensible to do so, national insurance rules should be aligned with income tax rules. It is important that national insurance rules keep in step with changes to income tax so that business is not faced with the burden of administering two sets of rules for the same type of remuneration. The amendments provide the most practical way in which to mirror in national insurance legislation the income tax changes in the Finance Bill, and I commend them to the House.

Lords amendment agreed to [Special Entry].

Lords amendments Nos. 62 and 63 agreed to.

New clause

Lords amendment: No. 64, after clause 50, to insert the following new clause—Class 1 contributions—
.—(1) For subsection (1) of section 5 of the Contributions and Benefits Act (earnings limits for Class I contributions) there shall be substituted the following subsections—
(1) For the purposes of this Act there shall for every tax year be—

(a) a lower earnings limit (for primary Class 1 contributions);
(b) an upper earnings limit (for primary Class 1 contributions); and
(c) an earnings threshold (for secondary Class 1 contributions).

(1A) For the tax year 1999–2000, the lower earnings limit (for primary Class 1 contributions) shall be £81.
(1B) For the tax year 2000–2001 and each subsequent tax year, the limits and threshold referred to in subsection (1) above shall be specified for that year by regulations which, in the case of those limits, shall be made in accordance with subsections (2) and (3) below.
 (2) For subsection (1) of section 6 of that Act (liability for Class 1 contributions) there shall be substituted the following subsection—
(1) Where in any tax week earnings are paid to or for the benefit of an earner over the age of 16 in respect of any one employment of his which is employed earner's employment—

(a) a primary Class 1 contribution shall be payable in accordance with this section and section 8 below if the amount paid exceeds the current lower earnings limit (or the prescribed equivalent in the case of earners paid otherwise than weekly); and
(b) a secondary Class 1 contribution shall be payable in accordance with this section and section 9 below if the amount paid exceeds the current earnings threshold (or the prescribed equivalent in the case of earners paid otherwise than weekly)."

(3) For subsections (1) and (2) of section 8 of that Act (calculation of primary Class 1 contributions) there shall be substituted the following subsections—
(1) Where a primary Class I contribution is payable, the amount of that contribution shall be the primary percentage of so much of the earner's earnings paid in the tax week, in respect of the employment in question, as—

(a) exceeds the current lower earnings limit (or the prescribed equivalent); and
(b) does not exceed the current upper earnings limit (or the prescribed equivalent);

but this subsection is subject to regulations under section 6(5) above and sections 116 to 120 below and to section 41 of the Pensions Act (reduced rates of Class 1 contributions for earners in contracted—out employment).
(2) For the purposes of this Act the primary percentage shall be 10 per cent; but the percentage is subject to alteration under sections 143 and 145 of the Administration Act.
(4) For section 9 of that Act there shall be substituted the following section—
Calculation of secondary Class 1 contributions.
9. —(1) Where a secondary Class 1 contribution is payable, the amount of that contribution shall be the secondary percentage of so much of the earnings paid in the tax week, in respect of the employment in question, as exceeds the current earnings threshold (or the prescribed equivalent).
(2) For the purposes of subsection (1) above, the secondary percentage shall be 12.2 per cent; but the percentage is subject to alteration under sections 143 and 145 of the Administration Act.


(3) Subsection (1) above is subject to regulations under section 6(5) above and sections 116 to 120 below and to section 41 of the Pensions Act."

Mr. Denham: I beg to move amendment (a) to the Lords amendment, leave out the first 'subsections' and insert 'subsection'.

Mr. Deputy Speaker (Mr. Michael Lord): With this, we may consider Government amendment (b) to the Lords amendment, Lords amendments Nos. 65, 73, 117, 147 to 153, 160 to 162 and 164, Lords amendment No. 166 and Government amendment (a) thereto, Lords amendments Nos. 167, 168 and 176 to 179. I should inform the House that amendment No. 64 involves privilege.

Mr. Denham: This group of amendments puts into effect changes to the structure of national insurance contributions for employees and their employers from April next year. It also includes two amendments that overturn the changes made to the Government's proposals in another place.
In his Budget statement on 17 March, my right hon. Friend the Chancellor of the Exchequer announced a radical reform of the national insurance system. The amendments are a crucial part of that strategy. They help to make work pay by increasing take-home pay for every employee who pays national insurance contributions, they encourage employers to create jobs for people moving from welfare into work, and they cut red tape for business by simplifying the structure of employer contributions. The measures follow the recommendations made by Martin Taylor, the head of the Government's tax-benefit review, following his wide consultation with business. Overall, they are a major step in the Government's drive to bring the national insurance system up to date with the modern labour market. I shall explain the effect of the amendments in more detail.
The main thrust of the changes is provided by Lords amendment No. 64, as it would stand with amendments (a) and (b). In the form originally introduced by the Government, amendment No. 64 would reduce employees national insurance contributions without affecting the ability to build up rights to contributory benefits. I shall deal later with the changes made in the other place to the Government's proposals, and more particularly with the amendments that will overturn those changes. For the moment, I should like to concentrate on the Government's proposals.
As a result of the Government's amendments, employees would pay contributions only on that part of their earnings that exceeds the lower earnings limit—currently £64 a week. Under the current system, employees pay no national insurance contributions when their total earnings are below £64 a week, but when earnings reach the lower earnings limit, they have to pay contributions at a rate of 2 per cent. on all their earnings up to that point.
That perverse "entry fee" costs every employee who pays contributions £1.28 a week. It means that some employees earning above the lower earnings limit receive less take-home pay than their colleagues whose gross earnings are lower. That is clearly an absurdity, and the amendments put an end to it. From April 1999, employees will pay contributions only on the part of their earnings that exceeds the lower earnings limit. That will help to

ensure that people find work attractive. It supplements the other steps that the Government are taking to make work pay.
Amendment No. 64 also makes three major changes to the structure of employer national insurance contributions. First, at the moment, employers begin to pay contributions when earnings reach £64 a week. The amendment will enable the Government to raise that threshold to the level of the single person's tax allowance—set at £81 a week this year. That will bring the system more closely into line with income tax, thus making it easier for employers to administer the two systems side by side.
Secondly, in parallel with the change to employee contributions, the employer entry fee will be abolished so that employers will not have to pay contributions on any earnings below the level of the single person's allowance.
Thirdly, the amendment simplifies the structure of employer national insurance contributions, bringing in a single rate of 12.2 per cent. in place of the four separate rates that apply now.
The package of changes to employer national insurance contributions is revenue neutral for employers as a whole. The changes will reduce the national insurance costs that employers face in respect of about 12.5 million people who earn below £450 a week. For example, employers will pay around £1.80 a week less for someone earning £155 a week, and £5 less for an employee on £220 a week. Those changes will make a very real difference. They will encourage employers to create jobs for people moving from welfare into work.
The reform of employer contributions will also remove distortions that mean that, when employees' wages increase, their employers' national insurance costs can increase by more than the wage rise itself. Simplification of the structure will reduce the amount that employers need to spend on administering the system.
Amendments Nos. 65 and 73 ensure that the proposed single rate of employer contribution will apply to the new class IB contribution. That is the new class of contribution being introduced in the Bill as part of the measures to enable employers to put items subject to national insurance in annual PAYE settlement agreements.
Amendment No. 147 makes a similar change in respect of class IA contributions paid by employers on company cars and car fuel provided to employees. I must make it absolutely clear that none of those changes to employee or employer national insurance contributions will affect people's rights to benefits and pensions, or their ability to build up such rights.
We have taken specific steps in amendment No. 166 to ensure that the changes do not reduce the rebates for employers with occupational pension schemes contracted out of the state earnings-related pension scheme. That means that people's future contracted-out pensions will not be affected. Government amendment (a) to amendment No. 166 is a consequential amendment required to correct a technical deficiency. Excluding those needed to reverse the changes made in the other place, the remaining amendments in the group are Nos. 117, 148, 149, 150, 151, 152, 153, 160, 161, 162, 164, 167, 168, 176, 177, and 178. Those make changes to schedules 7 and 8 by way of minor consequential amendments arising from the new contribution structure.
I must also draw the attention of the House to the fact that contributions payable into the national insurance fund are the subject of Commons privilege. That means that it


is the privilege of this House to introduce measures on that subject. It is, of course, a privilege which the House is able to waive, and I invite the House to do so in this case.
I now turn to amendments (a) and (b) to Lords amendment No. 64, which seek to remedy the damage caused by the introduction into our measures of changes put forward by members of the Conservative party in the other place—changes that are ill judged, irresponsible and imprudent.
The Conservatives seek to introduce into the Bill a change that my right hon. Friend the Chancellor of the Exchequer has said that he will make at a later date. It is indicative that the only amendments that the Opposition seek to make to the structural national insurance measures relate to an idea that they have stolen from our Chancellor. Those amendments would have a damaging effect. They would remove access to certain contributory benefits from up to 1 million low-paid workers, four fifths of them women. They would cut future SERPS, occupational and personal pensions for millions of others, and they would reduce national insurance contribution revenue by almost £1.5 billion a year without any consideration of whether the financial circumstances are right. I will go on to say more about those effects later; they show how reckless the Opposition amendments really are.
However, the main arguments advanced by the Opposition in the other place for their amendments were not—

Miss Kirkbride: I am somewhat perplexed by what the Minister has just said. If he claims that we are filching an idea from his own Chancellor, why does he condemn what we propose?

Mr. Denham: Because of the timing, and the way in which the Conservative party has sought to bring the changes forward, which, as I have said, is imprudent and reckless.

Mr. Burns: Why?

Mr. Denham: I shall deal with that point in a moment.
The main arguments made for the amendments by the Opposition in another place were nothing to do with the substance of the measures introduced by the Government in the Bill, so one can only assume that the Opposition agree with the measures themselves, but are reluctant to say so.
The main arguments were not even to do with the substance of the changes that the Opposition sought to make. Instead, they revolved around the fact that the Chancellor had announced his intention to raise the lower earnings limit as part of future reforms, but that the Government had not included the change in the Bill. The Opposition argued that their amendments were necessary to give the House the opportunity to debate the Chancellor's intentions. Those arguments make no sense. I suspect that, in part, they were put forward by the Conservative party to deflect attention from the damage that would be caused by the ill-thought-out changes that they sought to make.
I have no doubt that people found it helpful to hear from the Chancellor about a change that he intends to make in the future. Early notice helps business to prepare for future changes, and gives everyone a clear picture of the direction that the Government are taking.

Mr. Letwin: If the Minister thinks that people would have found it helpful for the Chancellor to talk about changes that he intended to make in the future, why did the Chancellor not say that he intended to make those changes in the future?

Mr. Denham: The Chancellor clearly indicated that he intended to make the changes in the future, and I will come to that point again in due course.
In developing his Budget proposals, the Chancellor felt that now was not the time to implement the change. That is clearly for him to decide. He must judge when financial circumstances are right for a measure with such significant revenue implications. As he explained, he would not implement the change until accompanying measures were in place to ensure that people did not lose access to contributory benefits as a result.
It is not, and never has been, the Government's intention to make that change to the lower earnings limit in April 1999. The Chancellor never said that it was. That is why the Government did not introduce the measure in the Bill.

Mr. Iain Duncan Smith: Is the Minister now saying that the Hansard record of his right hon. Friend's Budget speech is incorrect?

Mr. Denham: I do not really appreciate the point that the hon. Gentleman is trying to make. I do not believe that there is anything in the Hansard record or elsewhere that suggests that the Government intended to make the change to the lower earnings limit in April 1999.

Mr. Geoffrey Clifton-Brown: rose—

Mr. Denham: I shall listen to what the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) has to say—

Mr. Clifton-Brown: On that very point.

Mr. Denham: I must make some progress. I shall listen to what the hon. Member for Chingford and Woodford Green has to say, but it is clear that it is not and never has been the Government's intention to make the change to the lower earnings limit in April 1999. That is why the measure is not in the Bill.
Secondly, the House debated the Chancellor's Budget for a week. It has had ample opportunity to discuss every measure included in the Chancellor's announcement. The House and the other place will have ample opportunity to debate the alignment of the lower earnings limit with the single person's tax allowance, and the accompanying changes to benefit rules, when the Government bring forward the necessary primary legislation. That will be the time to debate the issues—when the Government have put forward detailed proposals on all aspects of them, and we have the proper legislation in front of us—not now, on the back of the Opposition's ill-considered amendments.

Mr. Clifton-Brown: Perhaps the Minister will clarify what the Chancellor said in his Budget speech, which was:
Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings.—[Official Report, 17 March 1998; Vol. 308, c. 1106.]

Mr. Denham: I hope that this will prove the opportunity to ensure that we do not waste a considerable time on a discussion of the interpretation of those words. The "Shorter Oxford English Dictionary" defines "further" as meaning at a more advanced point of time, and I am certain that at a more advanced point of time we shall bring forward the changes mentioned by the Chancellor in his Budget statement. I hope that the time of the House will not be wasted on the debate on the issue in another place, which, if I may say so, was not the finest debate I have read.
The Opposition have nothing of substance to say about the measures, and they will fail to make any serious case about the wording of the Chancellor's statement. It is perfectly clear that "further" means at a more advanced point of time, and I am sure that the changes will be brought forward at a more advanced point of time—but it will be at the right time. I hope that, now that I have dealt with that matter, Opposition Members will not seek to waste the time of the House any further.

Mr. Desmond Swayne: rose—

Mr. Denham: I suspect that this may be on the same point, in which case I should not take a further intervention—but I shall risk it.

Mr. Swayne: Is not all this the consequence of the fact that the Chancellor's statement bore so little resemblance to the Red Book that underpinned it, and of the Chancellor's habit of hyping up everything that he has to say and offering jam tomorrow? Did that not give people legitimate expectations that what he said meant jam today?

Mr. Denham: No.
To argue that the amendments were needed to give the House a chance to debate the issue is puzzling in the extreme. We have had such an opportunity, and we shall have further opportunities.
Let me turn to the impact that the Opposition's proposals would have in the absence of amendments (a) and (b) to Lords amendment No. 64. It is especially necessary for me to do so as the House may divide on the matter.
There is no doubt that, in terms of work incentives, the increase in the lower earnings limit would have very beneficial effects. It would increase take-home pay by up to £1.70 a week for every person who pays national insurance contributions. It would also further align the national insurance system with the tax system, thereby adding to the policies that the Government have already introduced to reduce burdens on business.
In those respects, of course, we favour the measure. We would. After all, as I have said, it is the Government's own policy. Unlike the Opposition, however, the Chancellor recognises that those effects are only part of the story. The change would mean that, in the absence of any other changes, up to 1 million people earning between

£64 and £81 a week would cease to have access to certain contributory benefits. They would no longer get jobseeker's allowance if they became unemployed. They would no longer get statutory maternity pay if they became pregnant and many of them would no longer build up rights to a state pension for when they retire.
That is, in part, why the Chancellor is not introducing this measure in April 1999. He made it clear that those low-paid workers would be protected against benefit losses. It will take time to bring forward and implement proposals on how that should be done, but it must be done.

Mr. Letwin: The Minister's case would have much more force if the Chancellor had made the changes that he intended to make in the Finance Bill. By introducing them in the Social Security Bill, did he not give the Minister the chance to make precisely those consequential changes about whose absence the Minister is complaining?

Mr. Denham: The hon. Gentleman misses the point. It takes time to prepare the sort of changes that can alter policy while protecting the benefit rights of people on low pay. Those changes cannot simply be willed overnight: they must be prepared carefully. It will take time to introduce and implement those proposals, but that must be done. It would not be right to introduce measures that have not had proper consideration and preparation.
The proposals from the Conservative party blithely ignore all those issues. They make no attempt to protect low-paid workers against benefit losses or to help the millions of others whose future SERPS and contracted-out pensions would be cut as a result. That is not this Government's idea of modernising the system, and I am sure that the millions of losers would share our view.
There is another gaping hole in the substance of the Opposition's proposals. Raising the lower earnings limit to the level of the single person's tax allowance would reduce contributions revenue by approaching £1.5 billion a year from next April. A change with revenue implications of that magnitude can clearly be introduced only when financial circumstances permit. In his Budget considerations, the Chancellor decided that the time would not be right in April 1999. That is for him to judge.
In introducing the measures into the Bill, the Opposition have taken no account of those crucial considerations. They are pushing for a change to be made outside of Budget deliberations, without offering any proposals on how the Government should deal with the revenue shortfall that would result. Their amendments give us no clues, and that is imprudence in the extreme.
The changes proposed by the Opposition drive a sledgehammer through the Government's carefully considered plans for restructuring the national insurance system. The Conservatives have taken a good idea and turned it into a bad one. They would take up to a million people out of the reach of certain contributory benefits, and they would reduce national insurance revenue by approaching £1.5 billion, with no indication of how the hole should be filled. The changes are


irresponsible and imprudent. I therefore urge the House to reverse the changes made in the other place by agreeing to amendments (a) and (b) to amendment No.64.
The Government's package of proposals has been widely welcomed. It will help to make work pay. If the new structure was in place today, were every employee paying national insurance would pay £1.28 a week less. Our proposals will also encourage employers to create jobs for people moving from welfare into work, and they will simplify the administration of the scheme for business. The overall effect will be to improve work incentives and make it more attractive to employ those moving from welfare into work.
The Government will build further on the measures in future reforms, but only when the time is right and when the benefit implications have been properly addressed. I urge the House to support this radical package of reforms by agreeing to this group of amendments.

Mr. Duncan Smith: We would not be having this debate in the context of the Bill—which is an absurdity—if the Government had not decided to dump all their national insurance changes on the back of legislation that had nearly completed its passage through the House of Lords. It is ironic that, although the Government have spent most of their first year saying how much they disagree with the other place and how little they regard what it does, they turn around at the first opportunity and put changes concerning a major part of their Budget at the back end of a Bill which had almost completed its Committee stage in the other place.
That means that we have only today in which to discuss the measures in this House. Given the Government's previous concern that elected chambers should have full rights of scrutiny, it seems strange that they did not follow the normal course and introduce a separate Bill in this place. It might have proceeded reasonably quickly and received a proper Committee stage when all the issues could have been discussed in detail. In essence, the Government have set out to avoid this Chamber for as long as they can with this legislation and have backtracked on their position regarding the other place, which verges on hypocrisy. However, I shall not dwell on that, as I wish to move on to the amendments.
There is concern that the Government's changes were not announced by the Chancellor in his Budget. I shall come to that matter in due course. In summary, there has been an abuse of this place and its processes by a Government who want to have their cake and eat it by saying what they like about the other place while using it as and when they see fit. In the Red Book, the Chancellor described the national insurance changes as
the biggest reform to the structure of national insurance contributions since 1975, at a cost of around £1.4 billion a year from April 1999.
I said at the time of the Budget that, by and large, we agreed with the national insurance changes. We believed that they were part of a natural process of reform, and I welcomed them. The changes follow those made by Lord Lawson when he was Chancellor, and I see no reason to oppose them. The Minister knows that, so we shall not waste too much time discussing the absolute merits of the case. I had several concerns, but I raised them at the time and I shall not repeat them now.
My noble Friend Lord Higgins moved the amendments in the other place in an attempt to point out the Chancellor's deception at the time of the Budget. The Chancellor essentially said one thing and then did another. In his statement of 17 March, he announced several changes to the national insurance contributions scheme, which we have discussed. At the time—his words are quite important—he said:
I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country.
Almost immediately—again, his words are important—he added:
Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their right to benefits protected." — [Official Report, 17 March 1998; Vol. 308, c. 1106.]
The Chancellor was absolutely clear about what he was saying: his choice of words was vital to the meaning of the speech. He did not, as the Minister claimed, use the word "future"; he used the word "further". There is a reason for that. All hon. Members know—or they should know—what a Minister means when he uses the word "further" in a speech about legislation. We assumed—as did those in the Gallery and others—that, when the Chancellor used the word "further", he meant that, linked to the Budget would be further announcements regarding the process of change that he had announced. If he had used the word "future", we would have known that the changes were not connected with the Budget and would not necessarily be involved with it. When the Chancellor said:
Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings",
I know that I was not alone in understanding that to mean that employees would be included as part of the reform. Members of the press made the same assumption. In a front-page article the day after the Budget, The Daily Telegraph stated:
no workers will pay National Insurance contributions on the first £81 of earnings".
On the same day, similar front-page coverage in the Financial Times—a newspaper not given to over-statement—said:
Employers and employees to pay no national insurance on the first £81 of wages.
Two major newspapers, among others, made clear what the Chancellor was doing. Many members of the public were left with the impression that the changes that the Chancellor had announced—and which the papers had confirmed—would take place; they knew that the effects would be substantial, particularly on their take-home weekly pay. They thought that the changes would amount to a reduction in personal taxation. Two days later, the "Money Box" programme on Radio 4, which is not a station given to overstatement—

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Mr. Phil Hope: But was it accurate?

Mr. Duncan Smith: If the hon. Member for Corby (Mr. Hope) had listened to "Money Box", he would know that it was precise about most of the Budget details. The interviewer said, in response to a caller that
a lot of people seem to think that they won't have to pay any National Insurance until their earnings hit eighty one pounds a week. I mean, even I've been a bit muddled by this.


An expert from Scottish Equitable, Mr. Stuart Ritchie, replied:
No, the Chancellor got this a little bit wrong in his speech…and newspapers are actually still getting it wrong today".
Even two days after the Budget, commentators were still trying to figure out exactly what the Chancellor had promised. Newspapers and radio programmes were all saying that the Chancellor had a made a mistake—that was the best that they could say about it.
When I studied the Red Book directly after the Budget, I could not find any figures that were relevant to the raising of the lower earnings limit, even though I looked hard. The Minister mentioned the complications—the need to sort out contributions, who would receive benefits and the effect on pensions. He rightly said that measures would have to be introduced and further discussions would have to take place.
Why did the Chancellor suggest the changes if he had no intention of implementing them in the next financial year? He said that he was flagging up the idea and that he would make the changes, but there is no provision for them in the Red Book. He was not simply saying that there was too little time before April next year; the Red Book clearly shows that he had no intention to introduce them.

Mr. Clifton-Brown: My hon. Friend makes exactly the right point. Is he aware that the Red Book states, in paragraph 3.31 on page 45:
The lower earning limits for employees will remain unchanged (at £64 in 1998–99)"?
That is totally contrary to what the Chancellor said in his statement.

Mr. Duncan Smith: My hon. Friend is absolutely right. The Chancellor said:
I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country.
Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings." — [Official Report, 17 March 1998; Vol. 308, c. 1106.]
None of the newspapers and broadcast media managed, at the time, to connect that statement with the Red Book, which made it clear that, in reality, the Chancellor had no intention of introducing the changes.
When the Chancellor appeared before the Treasury Select Committee, my hon. Friend the Member for Grantham and Stamford (Mr. Davies) asked him why he had used those words and what his intentions were. Remarkably, the Chancellor replied:
I said: 'Future reforms will also ensure that no-one pays National Insurance for the first £81'. The word is 'future'.
One can almost see him knitting his brows and glaring:
These are reforms we intend to make.
However, he had not used the word "future". If he had done, the media would not have made a mistake; they would have read the Red Book and asked, "Future? Which year does that mean? It is not in the Red Book, so it must be way out in the future." The Chancellor made his original statement so that the media would write a favourable story, even though it was not based in reality.

The Chancellor knew that few members of the public or the media would read the Select Committee's report—the thought that the media do not dwell on Select Committee reports is strange to hon. Members, I know—so he thought that he would try to rewrite the record. However, the record stands.
The Chancellor crafted his Budget speech well into the night—there was no chance that a word would slip out. He was content to let people believe that the raising of the lower earnings limit was part of the package of Budget measures—he wanted the public to believe that he was reducing their tax. He did not correct the papers the following morning; he did not send them letters saying, "You've got it wrong. You're misleading the public—that is not what I meant." He let the impression stand for that critical 24 hours during which the public are most focused on the changes in the Budget.
Why did the Chancellor do that? The answer can be found in an article in The Guardian, which reported that the Budget had been heavily tested with focus groups before it was announced to the House. It said:
Focus groups tested tax plans: Experiment in lifting Budget secrecy hailed as a success.
It is clear what happened. The Treasury was considering ways in which to raise the lower earnings limit, but had obviously not found a way to ensure that, as the Chancellor pledged, all employees earning between £64 and £81 would have their right to benefits protected. We understand that difficulty—the Government will have to resolve it.
The focus groups were, clearly, positive about the proposed change. They were told that their tax burden could be reduced, so they said: "That's wonderful. We rather like that." The Chancellor was not blind to that—the Labour party is not blind to focus groups, even though it is blind to everything else—so he hit on a plan: he would ensure that the Budget speech left the public with the impression that the changes would be made. He wanted to have his cake and eat it—he wanted to make minimal changes without going the whole way.
When my hon. Friend the Member for Grantham and Stamford confronted the Chancellor with the curious discrepancy between the Budget speech and the tables in the Red Book, the Chancellor made a crude attempt to rewrite the record. He did not want everyone to cotton on to the point.
These national insurance changes were dumped on the back end of the Bill in the other place because the last thing that the Government wanted was proper scrutiny in Committee of the whole House, which would have given the media plenty of time to realise exactly what was going on.
The Government love to talk about democracy and debate, but they hate discussing legislation. They are apparently strong on reforms of the other place, although we have yet to see what those will be, but they jumped at the first opportunity to bypass the Commons, because they worry about legitimately, democratically elected Members of Parliament scrutinising a deliberate attempt to force the press, the media and the public onto the wrong course in order to generate a warm feeling among the public.
I am extremely grateful to the House of Lords for giving us the chance to discuss these matters by amending the proposed national insurance changes. We finally have


the opportunity to expose the Chancellor's little scheme and his serious economy with the truth. We intend to support the original Lords amendments, and we will certainly oppose the changes proposed by the Minister.
When a Chancellor makes a speech as important as the Budget statement, which, after all, is arguably the single most important speech made by him or possibly by any member of the Government, the whole country hangs on his words. It is the only speech that I know of which is regularly broadcast in full and analysed as it is going on; it is commented on and digested by experts; it covers the front pages of the following day's newspapers; and it dominates the television news on the day.
That coverage is not of press releases but of the Chancellor's words. He knows as well as anyone else in the House that the words that he chooses are vital. There is no way in which he would play fast and loose and not bother about the phrasing that he uses.

Mr. Christopher Leslie: Will the hon. Gentleman give way?

Mr. Duncan Smith: In a minute.
The Chancellor would not want anybody to get the wrong impression, leading to a wrong result in the media the following day. The words were carefully crafted.
If the Government amendment is defeated and the Lords amendment is sustained, the Government will have serious thinking to do about the contributory principle. The Minister knows that, in any case, there is a serious debate that must be engaged in, because, with the moving of the Contributions Agency across to the Treasury, we are already concerned with the contributory principle and what will happen to it. It is perhaps high time that that debate was brought more into the open. I had hoped that that would happen with the pensions reforms, but I recognise that that is a matter for another day.
If the Government allowed the Lords amendment to be made, there would be plenty of time for us to have a proper, rational and reasonable debate that could assist them to find ways in which to resolve the matter. When the Chancellor makes a statement as powerful as the one that he makes on Budget day, he chooses his words carefully and knows full well the effect that they will have, and there is no way in which the House can let him slide away from an obligation that the general public believe him to have committed himself to: they expect to be better off each week, beyond the changes to the employer contributions, and that expectation was deliberately raised by the Government. The Chancellor must answer for that.
The Government should explain tonight why they persisted in allowing that misleading statement to run in the media without correction for the first, most crucial, 24 hours.

Mr. Quentin Davies: The Government have still not given the country an answer on what should be the future role of national insurance and whether they intend to make it part of the tax system. Elements of the Government's proposals, such as the decoupling of benefits from employer contributions and the merger of the Inland Revenue with the Contributions Agency, certainly tend in that direction. Will national

insurance be treated as tax, or shall we maintain the contributory principle in our welfare system? The Government remain undecided after a year.
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Even more important than those issues of substance, however, is the great issue of how the Government mean to treat with the British people. Do they intend to be straight with the British people? Will Ministers state the facts as they are, or will they prevaricate, try to deceive by sleight of hand and imply something that they know not to be the reality? Will they try to bury major items of legislation in an inappropriate Bill, on which we have only a few hours for discussion?
Those are crucial issues concerning Parliament's role in legislation and the Government's obligation to be straight with the electorate. Even if we are overridden on the substance of this debate by the Government's large majority in the House, those issues will remain, demanding an answer from the Government.
Before I discuss the Chancellor's unedifying behaviour in this matter, let me say that I do not think that the Minister helped the Government's credibility by the way in which he dealt with some of the specific issues raised by the Lords amendment. If I heard him correctly, he said that implementing, as the Conservative party wants to do, the proposal that the Chancellor appears to have made in his Budget speech to eliminate employee class I national insurance contributions below the income tax threshold would mean that employees earning less than that amount would lose their benefit entitlements.
That is a terrible misrepresentation, because the fact is that the Chancellor said:
Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their right to benefits protected."—[Official Report, 17 March 1998; Vol. 308, c. 1106.]
That proposal specifically eliminates the danger to which the Minister attached such importance tonight. He cannot possibly rubbish a proposal that includes the protection that he says is lacking. That is no way in which to deal with important matters.
The Minister then had the nerve to say that the changes in national insurance contributions introduced in the Budget would not damage benefits for employees. He specifically said 10 minutes ago that the changes would not damage the position of those who are opted out from the state earnings-related pension scheme.
I am particularly amazed that the Minister had the effrontery to say such a thing tonight, because when he and I debated this matter recently in a Delegated Legislation Committee, I made it absolutely plain—he could not deny the fact—that, although the new arrangements for SERPS rebates compensate those who have contracted out into personal pensions, they do not compensate those who have contracted out into salary-related occupational pension schemes, and that the SERPS rebate for money purchase schemes is actually being reduced.

Mr. Letwin: My hon. Friend is making this important point with great force. Does he agree that it was remarkable that the Minister did not refer to the distinction between money-related schemes and money


purchase schemes? One would have thought, given the previous exchange, that he would at least try to claim that the provision affected the money-related scheme. Is it not now clear that he has admitted the very point that my hon. Friend made earlier?

Mr. Davies: Indeed. We shall have to read Hansard very carefully. One must count one's spoons carefully with this Government. When we read this debate in Hansard, we shall see that the Minister had the nerve to say that the position of those who contracted out from SERPS was being protected. He knows that the position of a substantial number of employees who contracted out into salary-related occupational pension schemes is not being protected. Far from being protected, the position of those in money purchase schemes will be worse and they will get less by way of a SERPS rebate.
The Minister's speech did not meet the most elementary demand for clarity and straightforwardness which we expect of a Minister of the British Government. A Minister cannot come to the Dispatch Box to deal with this matter and leave out two thirds of the picture.

Mr. Leslie: rose—

Mr. Letwin: rose—

Mr. Davies: I shall give way first to my hon. Friend and then, of course, I shall give way to the hon. Member for Shipley (Mr. Leslie).

Mr. Letwin: Will my hon. Friend focus on an important corollary to this matter? Does he agree that the issue might become even more important with the compulsion on stakeholder pensions, especially if they turn out to be salary related? Does he agree that that creates an extremely interesting tension between the Minister's utterances tonight and in a previous encounter, and what he seems to propose for occupational pensions?

Mr. Davies: My hon. Friend puts his finger on an extremely sensitive and interesting point. That is another area of governance of this country where the Labour Government, after a year in office, simply cannot make up their mind what to do about compulsion in relation to stakeholder pensions. They have been discussing the matter for months and have still reached no conclusions. Here again, we must watch carefully what they say because there will be all kinds of slippery talk and attempts to deceive, while providing for a future argument that no formal lie was stated. We must watch for every trick in the book on this important matter.

Mr. Leslie: The hon. Gentleman mentioned two thirds of the picture. Can he clarify—I know that he wants to be responsible—whether the Opposition amendments made in the other place would leave a hole in the Exchequer finances of £1.5 billion from the financial year that starts in April 1999? How does the Conservative party propose to fill that hole? Would they add it to the national debt, raise additional taxes, or cut public services?

Mr. Davies: Had the hon. Gentleman been following the proceedings of the Treasury Select Committee—no

doubt he has not had time to do so; he cannot be blamed for being unable to follow the proceedings of every Select Committee—he would know two things. First, in dealing with the Budget, I made a range of proposals and criticisms, so one would have to explain across the range where one would have made different decisions on both the expenditure and revenue sides.
Secondly, when the Chancellor appeared before the Treasury Select Committee, I put to him the specific point that the hon. Gentleman correctly raised because I thought that it was possible to read the Chancellor's words in Hansard and believe that they carried the meaning ordinarily attached to them in the English language. Thus, when he said that further measures would be introduced to eliminate employee national insurance contributions of up to £81 a week, I, like the rest of the country—The Daily Telegraph and everyone else who has been quoted—naively believed that he was to be trusted.
I assumed that that was what the Chancellor genuinely intended to do, so I asked him, "How come you made that commitment, Chancellor, but in your Red Book—your projection of revenue and expenditure for the following four-year period—you take no account of the revenue cost of that measure?" If the hon. Gentleman reads the record of that sitting of the Treasury Select Committee, he will see that it was precisely that exchange that led to the comments that my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) quoted to the House.

Mr. Duncan Smith: Is not that the main point? My hon. Friend is making the point from his position in the Select Committee. However, if, as the Minister said, the Chancellor clearly intended to take such action, why was it not structured in the Red Book? Why did not the Chancellor announce in this year's Budget that everything would start from April next year? In this case, such action is not even mentioned in the Red Book, other than to say that it would not be done.

Mr. Davies: I could not agree more. Once the Chancellor had decided to promise further measures eliminating class I national insurance contributions below £81 a week, and decided to make no provision for that proposal in the Red Book, he was caught both ways. He was coming before the House either to make a proposal that was not costed, which was a serious failure for a Chancellor of the Exchequer, or to make a promise that he knew perfectly well was completely bogus. Arguably, that was an even greater failure—certainly a greater moral failure, if not a greater failure of competence. Clearly, he was guilty of one or the other.
I can only imagine that the reason for the Chancellor's committing that colossal error was that he underestimated the intelligence of the public and of Conservative Members. He will live to regret that, among many other things.

Mr. Clifton-Brown: I wonder whether there is a more sinister point to all of this—disagreement within the Labour party about its social security policy. Perhaps the Minister for Welfare Reform, who has genuinely campaigned in the House for years to look after the low-paid and the disadvantaged, wanted that measure,


but was restrained by the Chancellor from bringing it about. When the Budget statement was produced, Labour Members did not know who would win.

Mr. Davies: I agree with my hon. Friend. Clearly, in this matter, as in others, the Government do not know whether they are coming or going. They do not know whether it is Tuesday or Saturday. We have been waiting for more than six months for a White Paper on stakeholder pensions. My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) reminded me that we had a White Paper on welfare reform at the end of March. It was long on questions and platitudes, but extremely short on answers and solutions. It said that any reforms would be carried out over 10 or 20 years. I suppose that that is the Chancellor's definition of "future", and that everything will now be deferred until after the next and subsequent elections. That is the nature of the Labour Government and how they deal with urgent national problems.
I have not finished dealing with the way in which the Minister presented Government policies. There is a third way in which he was less than absolutely clear with the House and the British public in presenting the effects of the national insurance changes. He said that it was unambiguously good news for employers, or at least for all employers with employees earning less than £500 a week. He must know—in which case he should make it clear—that that is not the position. The provision does not have a straight-line effect.
If the Minister looks at page 47 of the Red Book—I sometimes wonder whether Ministers in this Government bother to read it—he will see chart 3.3, which is very peculiar and compares the effect of the introduction of the new rates of employer national insurance contribution with the current regime. We know that, in respect of employees on more than £500 a week, employers will pay more class II contributions, but some employers will pay more on modest earnings of between £100 and £200 a week. The table is clear: an employer will pay more than under the old regime for an employee earning £150 or £160 a week. However, the employer will pay less for an employee earning £170 or £180 a week.
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The anomalies are extraordinary. It is not true that the measures are unambiguously good news for employers and reduce the burden of national insurance contributions at low levels of income, only to be compensated by an increase at higher levels of employee incomes. There is one message in ministerial rhetoric and in the handout from Walworth road, and another reality in the detail of the Treasury documents.
You, Mr. Deputy Speaker, may think that I have been harsh on the Under-Secretary—after all, he has come to the House only to do his master's bidding—but I have been extremely kind to him, compared with what it is necessary to say about the Chancellor of the Exchequer. The Chancellor may simply have made a mistake. He said "further" when he meant to say "future". In the spirit of generosity that is part of the tradition of the House,

we not only take account of that as a theoretical possibility, but hope that it ultimately proves to be the correct hypothesis.

Mr. Duncan Smith: I do not think so.

Mr. Davies: My hon. Friend does not think so, but perhaps he is less generous minded than I am.

Mr. Letwin: Is my hon. Friend neglecting the gyroscopic spinning of the Chancellor's servants? If the Chancellor had made such a mistake, would not Mr. Whelan have been informing the press of the catastrophe in 25 minutes, let alone 24 hours, and asserting that it was merely a slip of the stenographer's hand?

Mr. Davies: I agree with my hon. Friend that that is part of the evidence that there was not a simple mistake. A serious issue is before us, because there are only two possibilities: either the Chancellor made a mistake or he deliberately spoke with forked tongue. It would be extremely serious if a Chancellor of the Exchequer of the United Kingdom had deliberately spoken with forked tongue. That goes way beyond the economic significance of tax changes, issues of mere competence or the attractions and costs of different political programmes to the heart of the integrity of the House, and the integrity of government.
I want fully to consider the possibility that there was a mistake. I am the first to acknowledge that we can all make mistakes or slips of the tongue. I am no less likely to make such mistakes than anyone else, but there is a simple remedy in this place: an hon. Member simply apologises to the House. That is extremely easy to do, and the tradition of this place is that, once an hon. Member has apologised, no further sanctions are called for and the matter is at an end. That has been the basis of the honour of the House of Commons for centuries, as you, Mr. Deputy Speaker, know as well as—indeed, better than—anyone.
The Chancellor never took that opportunity. Instead, he did something extremely serious which, sadly, can only confirm his serious guilt in the matter. He said something in the House and, to cover himself when it became clear that there was a fundamental contradiction between what he had said in the Budget speech and the Red Book, which was issued after it, he had the Treasury put out a completely false version of the text.
We are familiar with Governments in the past—not, I am glad to say, in this country—who have adopted the Orwellian method of retrospectively changing the text of speeches, but I did not expect that in this country in my political lifetime. I have in my hands the text of a press release put out by the Treasury after the Budget speech and after the row had begun. It is identical to the Budget speech in Hansard and is headed "check against delivery". We must check carefully when a speech by the Chancellor is delivered or committed to paper. It says:
Chancellor of the Exchequer Budget speech, 17 March 1998".
I read the speech, and the text corresponded exactly to Hansard, until I reached page 13, which states:
Future reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings.


I thought that I must have made a mistake, had a brainstorm or imagined something; indeed, if I had had a dream, it would have been a nightmare.
I looked again at Hansard, and the speech refers not to future reforms, but, as we all heard the Chancellor say, to "Further reforms". That is a very serious matter. Although the incident is a credit to the integrity of Hansard, the Government, unlike some totalitarian regimes, are not in a position retrospectively to doctor Hansard. Nevertheless, the Treasury saw fit to put out a document purporting to be an exact text of the Budget speech. One key word had been changed, which, I fear, is evidence that there was no mistake made in good faith, but a deliberate attempt to disguise reality—to speak with forked tongue. I am being very careful, Mr. Deputy Speaker, not to use an unparliamentary expression.

Mr. Deputy Speaker: Order. The hon. Member for Grantham and Stamford (Mr. Davies) is being very careful. I shall not ask him to withdraw the words "forked tongue", but I ask him to be careful in choosing his words.

Mr. Davies: If hon. Members have not got the point by now, they never will.
The Government can do only one thing to undo the damage that they have done to their credibility by behaving in such a way. They must, even at this late date, make a full and grovelling apology for this attempt to pull the wool over the eyes of the British public. It was doomed to failure, because they misunderstood and underestimated the intelligence of the British people, and the fact that the Opposition were wide awake and would not let them get away with it.

Mr. Clifton-Brown: My hon. Friend the Member for Grantham and Stamford (Mr. Davies) is in good voice and form this evening, and he has made many telling and interesting points. His main point is that the Government's left hand did not know what the right hand was doing, because it is clear that the Government had a genuine intention to remove from the national insurance net those people who earn less than £81 per week.
I mentioned that dichotomy in my speech on Second Reading of the Finance (No. 2) Bill and I quoted the relevant passage from the Chancellor's Budget speech. It is worth repeating that again, so that the House can be crystal clear about what exactly the Chancellor said. He said:
Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly eamings."—[Official Report, 17 March 1998; Vol. 308, c. 1106.]
That cannot be made much clearer—the crystal clear import of that statement is that anybody earning less than £81 per week would not pay national insurance. However, as I pointed out to my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), paragraph 3.31 of the Red Book states:
The lower earnings limit for employees will remain unchanged (at £64 in 1998–99).
Therefore, either the Chancellor was right or the Red Book was right, but they could not both be right.
What is so tragic and so dreadful about all this is that it is the low-paid who are being misled—inadvertently—by what the Chancellor said on Budget day. That is cruel.

If it had been you or I, Mr. Deputy Speaker, who had to suffer a pound or two more paid in national insurance, we should have been in a position to pay that increase.

Mr. Swayne: Speak for yourself.

Mr. Clifton-Brown: If my hon. Friend were earning less than £81 a week and suddenly expected to have a little more take-home pay, he would have been absolutely delighted by what the Chancellor said, but he would have been dreadfully disappointed when it subsequently came to light that he had not quite understood what the Chancellor really meant.
I am on serving on the Standing Committee on the Finance (No. 2) Bill and members of that Committee have discovered that that Bill provides for an unprecedented transfer of secondary powers to Treasury officials. For example, clause 158 provides that all the necessary regulations connected with the implementation of the single European currency can simply be delegated to Treasury officials by secondary legislation. The Bill before us now similarly transfers huge powers to officials by secondary legislation. The message is that if the Chancellor cannot get it right on Budget day, it will be put right subsequently by secondary legislation.
That is a highly unacceptable way to go about these matters. It is a complete abrogation of the sovereignty of the House of Commons. We are here and, over the centuries, we have been given the power, enshrined in the Parliament Act 1688, to be the money-granting authority. There is no higher money-granting authority than the House of Commons. To abrogate that responsibility by secondary legislation is unacceptable.

Mr. Swayne: Does my hon. Friend accept that this amounts to something approaching the continental pattern of government by decree? Does he agree that it represents a complete negation of the achievements of the Chartists, who saw the question of the suffrage as a knife-and-fork question, a bread-and-cheese question?

Mr. Clifton-Brown: I totally agree with my hon. Friend. It is an abrogation of the achievements not only of the Chartists, but of the Long Parliament of the 13th century. Throughout the long history of Parliament, the House of Commons has had primacy as the money-granting authority. Here we have a Government, in an unprecedented way, transferring powers to officials in the Treasury, whereas we in this place should be ensuring that such measures appear in primary legislation and are subject to the full glare of scrutiny, both here on the Floor of the House and upstairs in Committee, so that when things are not as they should be, the Opposition—and, I have no doubt, the Labour party when it goes back into opposition in due course—have the opportunity to correct the Government of the day.
The Government may well rue the day they embarked on the process of a huge transfer of power, because, having transferred it to Treasury officials, they will find it hard to claw back. Ministers do not have the proper scrutiny and control over secondary legislation, and we find that that control slowly slips still further towards Europe. That is a wholly undesirable state of affairs.
Much more importantly, I dislike the whole concept of national insurance. What we should do is abolish national insurance altogether and put it totally on income tax and corporation tax. That is a much fairer basis for taxation, because those are properly progressive taxes. Paragraph 3.30 of the Red Book reveals the huge distortion caused by the national insurance system, which the Conservative amendment made in the Lords started to address. To be fair, the Government have recognised that.
It is worth noting, because it is at the heart of this debate, that paragraph 3.30 states:
The current structure of NICs bears particularly acutely on the low-paid and discourages job creation at the lower end of the earnings distribution. Steps in the structure of national insurance, whereby a one penny increase in pay can trigger an increase in NICs of up to £6.30 a week".
In other words, a 1p increase in pay can trigger a 630 per cent. increase in tax. If that is not a massive distortion in the tax system, I do not know what is. Paragraph 3.30 says that the structure of NICs
distorts the labour market, discouraging progression up the earnings ladder. These distortions are greatest at the lower earnings limit".
To raise that lower earnings limit immediately and not wait a whole year is precisely the point of the Conservative Lords amendments. Paragraph 3.30 says that
a rise in earnings from £63.99 to £64 a week triggers a NIC charge (the 'entry fee') for employees of £1.28 and for employers of £1.92 a week",
and says that that is
one of the last remaining causes of people being worse off when they earn more.
That should be eliminated for ever, and thank god when it happens.
I support the Conservative Lords amendments, because of that distortion and that huge disadvantage for the low-paid. My own Government should have put it right years ago. I urged my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) to do that when he was Chancellor and I am sure that, had the Conservative Government been returned to office, he would have paid close attention to the problem.
Considering how much the Government have been able to reduce this country's debt burden, one might have thought that they would be prepared to spend £1.4 billion—which they have committed themselves to spending next year in any case—on helping some of the lowest-paid people in our society who are living in the most appalling and mean conditions. One might have thought that the Government would be only too anxious to introduce that measure as quickly as possible. The amendments are wholly right and I urge the Government to take them away, look at them on behalf of the low-paid, some of whom can hardly afford to feed themselves, and see whether they cannot be more generous and enact the provisions immediately.
We all recall that for employees earning more than £81 a week, the employer's rate will be increased to 12.2 per cent. The Red Book makes an interesting point about this, saying:
The employer package is revenue-neutral, so that the burden of employer NICs as a whole will remain unchanged.
There is no reason why the employer changes could not have been made immediately.
It is reprehensible that rather than the measures being included in the Finance Bill—as they would have been in the past—they have been tacked on to a measly Social Security Bill at the eleventh hour.
This demonstrates all too clearly that the present Government do not know what they are doing, and did not think the matter through before introducing a Budget.
The Standing Committee considering the Finance Bill is finding serious flaws in nearly every clause, because the Government have not consulted those who are most involved: tax practitioners, accountancy bodies and lawyers. If they had done as we did when we were in government, and taken the trouble to consult such experts—which, frankly, is the only correct thing to do—they might have produced a rather more orderly Bill, and might have avoided some of the more elementary errors.
I have written a paper on the reform of the state pension. The general issue of pensions is directly relevant to the change in national insurance contributions proposed in the excellent Lords amendments. One of the core problems encountered by the Minister today was how he could make up the amount if the lower earnings limit was raised from £64 to £81 a week. In my paper—which I submitted to the Minister for Welfare Reform, as a contribution to his White Paper and his review of the pensions system—I proposed a credit for all low-paid people, all people who were out of work and all working housewives who were earning less than the national insurance lower earnings limit. I feel that people who would normally expect such a credit should receive it, and that there is no reason why the Government cannot compensate for the rise in the lower earnings limit.
It is clear from the demographic trends that if nothing is done about the state pension, it will wither on the vine. When the time comes for me and you, Mr. Deputy Speaker, to retire—in many years' time—we shall suddenly find that the state pension is worth considerably less than it is now in real terms. The Government will have to deal with that problem; otherwise, it will cost all of us who are in work a good deal of money.
Allied to that problem is the problem of the state earnings-related pension scheme. We must encourage all people of working age, especially young people, to take out a second pension—through the national insurance system, if we must do that, or, in my book, through the income tax and corporation tax systems. We must provide a mechanism to make that possible. I think that the Minister for Welfare Reform wants that as well, but that the Chancellor has imposed a constraint because of the cost involved.
The Government must tackle the issue of second pensions. If they do not, they will be chucked out, and a future Conservative Government will have to tackle it. The abolition of advance corporation tax credits suggests to me that the Government are not interested in people's ability to retire with a decent pension and with dignity. As a result of 18 years of excellent government by the Conservative Administration, more than 50 per cent. of people retired with some form of second pension. That was a worthy achievement. People who have their own pensions can choose how to spend their money in their old age, and are much less dependent on the state. In this and other measures imposed in the previous and current


Budgets, the Government are driving people into increasing dependency on the state. They want to level everyone down to the lowest common denominator.
I was sent here by my constituents to improve the lot of everyone in the country, including the lower-paid and, in particular, pensioners—especially pensioners who have little money and rely on benefits. I want future generations not to have to rely on a measly state pension topped up by some form of benefit; that is a disgrace to society, with which any well-meaning Government should try to deal.
I have drawn attention to the distortion involved in the marginal rate of tax which is shown in the Red Book. An increase of 1p in someone's income can result in an effective national insurance increase of 630 per cent. The Government should do something about that: if they are not prepared to, they should consider themselves an utter disgrace, and the sooner they are chucked out because they are uncaring, the better.

Mr. Rendel: I hope that the tone of my speech will be more tolerant than that of the last two speeches.
I sympathise to an extent with the view expressed by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) and others; it is odd that such a major part of the Budget should be introduced in the form of a Lords amendment to a Social Security Bill. I think many people would consider it an unusual and, in some ways, undemocratic way of making a major alteration. In that respect, I have some sympathy with the Conservative party.
It must be said, however, that the Lords amendment was introduced because a large number of hereditary peers outvoted peers who were not hereditary. Conservative Members have referred to abuses of the parliamentary system; surely that is an abuse considerably further up the scale than anything that the Government are trying to introduce, or any method that they are attempting to employ.
Many people outside would think it a rather odd use of parliamentary time to engage in what will probably be three and a half hours of debate about whether the Chancellor said further or future, whether the change was the result of a slip of the tongue or was introduced deliberately and how the two words came to be muddled up—and, indeed, the exact meaning and implication of the two words. People might consider it not entirely sensible for those who have been sent here to represent their constituents to engage in such a debate.

Mr. Duncan Smith: Having recalled the Budget debate and the subsequent media coverage, does the hon. Gentleman not see that there was a clear recognition that changes were made that were relevant to employees? The public would have understood that because of what they read and listened to. The coverage that took place in the 24 hours, or perhaps two days, after the Budget speech is what people will have absorbed most; that is what will have given them an understanding of where the Government were going. There is nothing unintentional about that.

Mr. Rendel: I do not deny for a moment that people probably gained an impression—which was not to be

realised in practice—of what the Chancellor intended. Perhaps we are all to blame for not pointing out how wrong, or how misleading, the Chancellor had been.
Let me make what is perhaps an even more important point. I am surprised that the main Opposition party makes such a fuss about the matter. Surely one of the things that put people off political parties is finding that they have been misled. I would expect the fact that many people who expected their national insurance contributions to fall have found that they have not fallen to be very damaging to the Government. I would expect the fact that the Government were able to mislead people in the short term to be to their disadvantage, and I am surprised that the Conservative party is complaining.

Mr. Quentin Davies: I entirely agree that trying to deceive the British public is not good politics and that the Government will pay a price for it. The important thing about the word that was used is not whether the Chancellor said future or further but why, having said the one, he then tried to make out that he had said the other. It is the cover-up which is sinister and which requires an explanation from the Government.

Mr. Rendel: I have no idea whether it was a slip of the tongue or deliberate, and I do not think it desperately important. The fact is that the public were given one impression, only to find now that it was wrong. They will take against the Government for that reason. I should have thought the Conservatives would be pleased about that instead of castigating the Government so much for it.
The increase in the lower earnings limit is welcome, whenever it comes. I sympathise with Conservatives who find it disappointing that it is not to happen in the first year. We, like everyone else, are disappointed by that.

Mr. Swayne: Does the hon. Gentleman agree that any reading of the Red Book suggests that the change is never to come?

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Mr. Rendel: The Red Book appears to give no indication of it, but that does not mean to say that it will never come. There is every impression that the Government still intend to introduce the change at some point. The Red Book comes out each year; if the Government intend to effect the change next year I expect them to change the Red Book then.
Our original criticism—the Chancellor certainly hoped to overcome it—concerned the difficulties caused for those who no longer pay contributions in terms of their rights to contributory benefits. When the changes are made, it is critical that, alongside them, changes to eligibility for contributory benefits are also made. People who no longer pay national insurance on the lower part of their income should retain their rights in that respect.
One of the most widespread criticisms of the welfare system is that benefits are sometimes not provided for those who most need them, maternity benefits being a case in point. Women on the lowest pay tend to be those who have to go without the benefits, which to most people seems absurd. The fact that the system is contributory has done the damage and has led to a great deal of justified criticism.
If we are to change the threshold at which contributions are paid, we need to overcome the difficulty I have described by making the necessary other changes alongside. That is why it is right on this occasion to support the Government's amendment—the two measures must go through together. They will both be welcome; I hope that they will be put into effect as soon as possible. The Lords amendment would prevent that, which is why it is important to amend it in the way the Government propose.

Mr. Swayne: I fear that I shall be unable to match the passion and anger of my hon. Friends the Members for Grantham and Stamford (Mr. Davies) and for Cotswold (Mr. Clifton-Brown). My heart is filled more with disappointment than with anger. I regard it as a bit rich of the Under-Secretary to accuse my party of irresponsibility and of being precipitate in our haste to bring in the Chancellor's plan to change the lower earnings limit to £81. We have been accused of not thinking the issue through properly and of not giving sufficient consideration to its financing or the rules protecting the benefit rights of those who would be affected.
The Red Book trumpets the reform as the most radical reform of national insurance since 1975. The trouble is that tagging it on to this and subsequent amendments severely restricts the time available for scrutiny and consultation. It is therefore a bit rich of the Government to accuse us of irresponsibility for opposing amendment (a).
My hon. Friend the Member for Cotswold has already pointed out that the amendments contain a range of open-ended powers that enable the Government to make changes subsequently, without reference to legislation.

Mr. Letwin: Does my hon. Friend agree that that is characteristic of the Bill and that such general powers are to be found throughout it?

Mr. Swayne: It is also characteristic of the Finance Bill. My hon. Friend the Member for Cotswold was right to correct me when I drew attention to the Chartists and their desire for no taxation without representation. That question goes much further back, to the Long Parliament, when ship money was the issue at stake. The Executive was raising taxes without the authority of the Commons. That led to the grand remonstrance, which in turn led to a complete change in the polity of this nation over 20 years during which the governance of the country was turned upside down.

Mr. Letwin: Would my hon. Friend agree, on reflection, that there is a remarkable similarity between Dr. Prynne, of ship money fame, and Mr. Whelan?

Mr. Swayne: That is a pertinent point. Ship money was actually a very fair tax, subsequently imposed by Parliament itself during the interregnum. The basis on which it had been calculated was fair and proper. What was wrong with the tax, just as with these arrangements, was that it did not have the proper authority of Parliament—at least not under Charles I.
I want to move on some 400 years now, to Lords amendment No. 64. My constituents thought that the Chancellor was raising the lower earnings limit for

national insurance contributions to £81 a week—as witness column 1106 in Hansard for 17 March. My constituents can hardly be blamed for doing so: their representative sitting here during the Budget statement also thought that that was what was going to happen. I was thinking about the interview that I had agreed to give subsequently to Meridian Television, and my mind was concentrated on that. I heard the Chancellor's message with mixed feelings. My natural elation at the beneficial nature of the change was tempered only by my nervousness at knowing that I had to face the cameras and pour cold water on the Budget statement. Those contrary emotions rivalled one another.
The Under-Secretary will remember the interview well, because he shared it with me. He will no doubt recall my nervousness and inability to make up my mind one way or the other about the Budget. Had I had the benefit of the subsequent revisions and the gloss that has been put on that statement, I might have made a better fist of the interview.
Equally, my constituents could not be blamed for thinking that the lower earnings limit for national insurance contributions was to be raised to £81 because a disproportionate number of them read The Daily Telegraph, on the front page of which it was headlined on 18 May. For those few corporate bureaucrats who persist in reading the Financial Times, it was in that as well. My constituents were given the clear impression that the lower earnings limit was to rise to a new limit of £81 and, of course, much joy attended that announcement.
As my hon. Friend the Member for Cotswold has said, that would have had significant advantages for all people on lower incomes, particularly those who might properly be considered to move within what has often been characterised as the unemployment or benefits trap. Now they discover that this is a measure for the future. It is to be jam tomorrow, or, more properly, as any examination of the Red Book will reveal, beyond tomorrow—not so much jam tomorrow as the people's strawberry jam having been adulterated with wooden pips by the Chancellor himself.
Frankly, I would prefer the Budget as it was originally given by the Chancellor. That is why I wish to vote against Government amendment (a) to Lords amendment No. 64: to keep the Budget as it was and to preserve the Chancellor's original intention. The Under-Secretary has said that it is most irresponsible of us to do so. He has referred to the huge hole in the finances that will emerge as a consequence.
Perhaps I might be permitted to express an entirely personal opinion. It is my view that the Chancellor's Budget may have significantly overtightened the fiscal stance beyond what is advisable and that we might be thankful of a loosening of some £1.4 billion in the months to come, bearing in mind the significant difficulties in which the manufacturing sector already finds itself, so I reject any argument of irresponsibility that the Under-Secretary makes on the ground of fiscal loosening.
The Under-Secretary has said that we are irresponsible in that we have not properly thought through the protection of the rights of people who will benefit from this measure—the protection of their rights to benefit.

Mr. Clifton-Brown: One of the benefits of having to sit through these long debates is that one has an


opportunity to scrutinise the Government's documents more carefully. My hon. Friend referred to a fiscal tightening in the Budget; there is no question but that it is a fiscal-tightening Budget. Is he aware of paragraph B.19 on page 116 of the Red Book, which clearly states:
Net tax receipts are projected to grow by 6 per cent. in 1998–99, rather faster than money GDP"?
That absolutely goes to prove that this is indeed a severe fiscal-tightening Budget.

Mr. Swayne: I thank my hon. Friend for that intervention. I fear that I do not have his eye for detail or his intellectual rigour in examining these things. I read the Red Book as an amateur, but, without being able to refer to chapter and verse, as he has done, I could clearly see that there was scope for a more generous fiscal stance in the Budget. It was certainly my belief that it was desirable to do that. I am deeply fearful of the consequences of our fiscal stance; I have already referred to the situation that the manufacturing sector faces. I reject entirely the argument that, in proposing this measure, we are being fiscally irresponsible.
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We have been accused of irresponsibility over the protection of social security benefits. I sat here on this Bench listening to the Chancellor's statement. He said that social security benefits would be protected. We now discover that he said so irresponsibly, according to the criteria that were defined by the Under-Secretary. The Chancellor had not, it appears, thought through the means by which the benefits would be protected, so if I and anyone else looking to vote against amendment (a) are to be accused of irresponsibility, the same applies to the very statement that the Chancellor made.
I cannot be expected to run the country from the bottom, but I can be expected to vote for the Lords amendment and, in so doing, put proper pressure on the Chancellor to think through how these benefit rights are to be protected while a fiscal hole appears in his Budget arithmetic.

Mr. Letwin: I should like to discuss three issues. The first relates closely to the powerful speech by my hon. Friend the Member for Grantham and Stamford (Mr. Davies)—I thought that it was one of the most bravura performances that I have heard since coming to the House—but takes his argument one stage further. It relates to the point that the hon. Member for Newbury (Mr. Rendel) raised: why are we concerned about further-future dispute, the minutiae of Hansard against press releases and so forth?
To answer that question, one has to consider a further question—perhaps I should say the future question. What was it that the Chancellor and Mr. Whelan between them were trying to achieve by the manoeuvres, first, of raising expectations, secondly, of fostering the raised expectations by not spinning to deny them and, finally, of denying that the expectations had ever been raised by issuing a press release, which, so to speak, retrospectively uncorrected the statement?
What was the purpose of that? It is a strange set of occurrences. We have to inquire of two highly intelligent and experienced people—the Chancellor, perhaps the

most experienced and intelligent member of the Government, to judge by much of what has been said about him; and a man who is regarded as the rival of the legendary Mr. Campbell in his management of the press. What did those two highly intelligent and experienced people seek to achieve by those manoeuvres?
I cannot bring the power of analysis that my hon. and, I would say, learned Friend the Member for New Forest, West (Mr. Swayne) has brought to the historical exposition of the matter. I cannot be expected to be certain of this highly speculative inquiry, but I do think that there is a likelihood—a strong and serious likelihood—that what was going on was a conscious attempt to try to make the British public attend to one item, in order to make them attend less to other items in the Budget.
I may be wrong. I would be happy if the Minister were to contradict what I say, or if subsequently, his hon. Friends were to deny it, but that must be—stripping away all the rhetoric and politicking of this place and places outside—the most likely explanation of what was being done. It was hoped that the British public could be persuaded that there was something so nice in the Budget for them, alongside all the other goodies—

Mr. Swayne: Could it possibly have been that the Government hoped that the public, thinking that there was to be a raising of the lower limit of national insurance contributions, would be so blinded by that that they would not notice the abolition of retirement relief on capital gains tax, which has cost a constituent of mine—of very modest means—a staggering £55,000?

Mr. Letwin: My hon. Friend may be right in suggesting that the Government wanted to throw that item into low relief, but the Budget contained other such items—for example, it made it less favourable to be married. The Government presumably did not want the public to concentrate on that, either.

Miss Kirkbride: Would my hon. Friend speculate on matters between Mr. Whelan and Mr. Campbell? I am not sure that Mr. Campbell would be pleased by my hon. Friend's suggestion that it was all Mr. Whelan's idea and therefore had not come from the Prime Minister's office.

Mr. Letwin: My hon. Friend is taking me dangerously close to deep waters with thin ice over them. I fear that the Chair would call me to order if I indulged in further speculation about the liaison between Mr. Whelan and Mr. Campbell—which is, indeed, most interesting. I will let the matter rest on the naive supposition that we are dealing here merely with the Chancellor and Mr. Whelan, and their motive.
Whether it was the particular measure mentioned by my hon. Friend the Member for New Forest, West or other measures, as in any other Budget, this Budget contained measures which the Government did not wish the public to spend much time thinking about. However, there were also some measures that they did wish the public to think about, and they threw those into high relief. I do not think that it is any coincidence that the points made by my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) about what appeared not just in the press, but on the front pages, were the very matters that we are now discussing. I do not think that it is an accident,


because I attribute to Mr. Whelan—not to mention Mr. Campbell—the greatest possible dexterity in steering editors towards those items that the Government would like to see on the front pages, and away from those that they would not like to see. That is not always successful, as is the case with the Foreign Secretary at the moment—

Mr. Duncan Smith: Does my hon. Friend think that had a front-page item appeared that the Government thought was not favourable, they would have let it stand and let the media commentators pursue it, enlighten the public and take it further? Or does he think that they would have used their undoubted arts to stamp on it, get rid of it, get the paper to retract it, or even go so far as expecting it to apologise for referring to it?

Mr. Letwin: Good heavens, the Government would have been there in a trice. The whole formidable armoury of their technology and their Government machine would have enabled them to clamp down on such a story in an instant. That is well established. In fact, the Government fostered the measure on to the front pages to distract attention from other items.
The hon. Member for Newbury (Mr. Rendel) is sitting in his place with his customary courtesy, but looking for all the world as though this is a ludicrous diversion. Why, he wonders, are we concentrating upon such a matter? It is because it tells us something about a process which even the hon. Gentleman, to do him justice, thinks a little strange—the process which underlies this group of amendments, which the Government introduced in the other place. The Chancellor, most remarkably, is attempting to enact a major part—indeed, a signal part—of his Budget without reference to this House until a very late stage, and then only for a very short debate, by means of introducing in the other place a series of amendments in a quite different Bill.
There is a profound link between the strange manoeuvrings of the Chancellor, with his fervour, and Mr. Whelan, with his fostering of the fervour and of the mistaken impression, and Mr. Whelan's subsequent future, and the process of going behind the back of this House and into another place to legislate. That profound link is that both are evasions of the parliamentary process. Both are means by which, instead of exposing issues to the full glare of debate in this House in an open fashion so that the public know what is happening, the issues are concealed—the issues that the Government do not wish to be dealt with in this House and before the public. They have arranged matters so that a few people, latish in the evening, are debating serious matters, preferably without attention, following a great splurge of publicity in which the pubic have been misled—consciously misled by the fine arts of Mr. Whelan—into believing that something very nice is being done for them.
I accept the point made—very poignantly, as always—by the hon. Member for Newbury that if we were an unprincipled and unscrupulous Opposition, all this would be a delight to us in one respect. After all, the next election is not won today or tomorrow, so it should be a delight to us—and, presumably, to the hon. Gentleman and his colleagues—that the Government will eventually be found out by the very many people who expect to benefit from a very nice benefit, but who, in the event, will not get it for the foreseeable future.
In fact, it is not a delight to us to be in circumstances in which the Government treat the House with such contempt that they do not mind using a statement in this House—above all, a Budget statement—purely for the purpose of manipulating the press, and then subsequently using a parliamentary device to minimise debate on a crucial measure that raises vast sums of money and has a great impact on the tax and benefit system.
That is not a trivial point; it is one of the utmost seriousness. I admit that there is an element of frivolity and amusement because we are able to attack a Chancellor who is not present, but the point underlying this debate is deadly serious and deserves to be answered. It was not answered in the Under-Secretary's opening remarks. I do not know whether the Minister for the Environment, who is now sitting on the Front Bench, or the Under-Secretary will answer it, but I hope that someone will—

Mr. Swayne: Will my hon. Friend reflect on the fact that where the Government have introduced very significant tax-raising measures, that has been done in a complicated way that has ensured that no one has noticed, but that where they have introduced measures that amount, in effect, to a giveaway, their approach has been quite the opposite?

Mr. Letwin: That is exactly the point that I am making. The contrast is between that which appears to be done in the light and that which is done, as far as is possible, in the dark. That is not the way to conduct government.
My second point relates to a matter raised by my hon. Friend the Member for New Forest, West in response to a serious accusation made by the Under-Secretary. The hon. Gentleman described the efforts of our noble Friends to amend the Bill, in the way that the Government's amendment would reverse, as irresponsible. As my hon. Friend pointed out, there were two elements to the accusation. One related to what was said to be the irresponsibility of not correcting the problems associated with the contributory principle—the problems for people who would otherwise lose their benefit—as part of raising the lower earnings limit.
The hon. Member for Newbury is learned in these matters and he spoke about them at great length in Committee and elsewhere. He pointed out his distaste for the contributory principle, at least so far as it affects people lower down the chain. He was making the argument—I hope that he will intervene if I am misrepresenting him—that people on lower earnings should not have to contribute in order to qualify for some of the benefits which, currently, require contributions in order to qualify. That is a serious argument and it may, in part, be right. However, that was not the substantive issue that the Under-Secretary raised. His argument was that we had failed to allow for the fact that it would take a long time to sort out—mechanistically, legally and through legislation—the problem that would arise in trying to protect the benefits of people below the £81 limit but above the £64 limit if amendment No. 64 were introduced without other changes.
The Under-Secretary of State for Social Security told the House that it was impossible—I am not sure that he used that word, but that was certainly the burden of his remarks—for the Government to introduce appropriate provisions in the other place. The fact is that, at that very


time, the other place was itself producing a vast array of measures. The "Lords amendments to the Social Security Bill" is a huge document. Although I am not an experienced parliamentarian, I have not, since being elected to the House, seen anything like that number of amendments. After speaking to other hon. Members who are much older and more experienced than I am, I have been assured that the number of amendments in this group of Lords amendments is wholly exceptional.
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The Government were therefore tabling in the other place a vast array of technically complex amendments. They took months and months to do so. In Committee, we ended discussion on the matter months ago, but it took months for the issue even to reach Second Reading in the other place—although the Government had ample opportunity, if they so wished, to ensure that that happened earlier. The Government took their time on this measure.
The Under-Secretary was trying to tell the House that, in all those months, it was impossible for the Government—with all their ingenuity, and with all their officials supporting them; after they had, as my hon. Friend the Member for New Forest, West said, considered the issues sufficiently to allow the Chancellor to make the statement that the benefits would be protected—to find a way of dealing with the problem of people who are below the £81 and above the £64 limit, and who should continue to be entitled to have their benefits.

Mr. Clifton-Brown: I wonder whether my hon. Friend agrees that the genesis of the problem was the pledge made by the Labour party during the general election that it would not increase income tax? Having put themselves on that specific hook, they were unable to introduce measures that would have been wholly popular and helped some of the lowest paid and most vulnerable people in our society.

Mr. Letwin: I am grateful to my hon. Friend for his intervention. I shall deal in a moment with that matter, which is the second part of the gravamen of the attack made by the Under-Secretary—which was to do with whether a surplus was available for distribution. We will come back to that matter.
I should like to continue on the question of whether the Government could have produced mechanistic devices to remedy the problem of entitlement to benefit for those between the current and proposed lower earnings limits.

Mr. Desmond Browne: As entertaining as this discourse is, does it not substantially misrepresent the Minister's argument, which is that the Chancellor's view is that this is not the appropriate time to be making such changes? The Minister's view was not that it could not be done, but that it would take time. He also said that the Chancellor had decided that this was not

the appropriate time to make the changes, and that it was the Chancellor's prerogative to decide on the appropriate time.

Mr. Letwin: I shall deal with precisely that point in the second part of my remarks. I agree that that was part of what the Minister said.

Mr. Browne: It is what he said.

Mr. Letwin: No, it was not. If the hon. Gentleman reads Hansard tomorrow, I think that he will find that the Minister made two points. I took careful notes of what he said. The first point was that there was not time to consider what would have to be done about the very specific problem of benefit entitlement. Secondly—exactly as the hon. Member for Kilmarnock and Loudoun (Mr. Browne) said—he asserted that it was the Chancellor's prerogative to decide whether the money was available.

Mr. Browne: On this occasion, I intervene not because the hon. Gentleman has misrepresented the Minister's comments but because he has misrepresented mine. I reminded the hon. Gentleman that the Minister said that it was the Chancellor's prerogative to decide when the time was right.

Mr. Letwin: I agree that that is exactly what the hon. Gentleman said, and I shall deal with exactly that matter of whether the Chancellor should have taken that decision. However, that was only half of the Minister's argument; the other half was about insufficient time to make the change on benefit entitlement.
It is not only a matter of the Government not mustering the resources to make the change—although I am somewhat surprised about that—because the matter is much more serious than that. At least pro tem, the change could have been made with little difficulty. It certainly would not have required a Bill as large as the Social Security Bill, or such a vast array of Lords amendments.
The Government could have simply introduced a straightforward amendment, allowing it to be "deemed"— a simple word which the Government have used repeatedly in the Bill, and elsewhere—that people who had not made their contributions, but whose incomes lay between the earlier and later earnings limits of £64 and £81, had made such contributions as they would have made regardless. I do not say that that solution is perfect. It may be that, over time, the ingenuity of officials and Ministers would lead to a superior solution.

Mr. Rendel: If, as the hon. Gentleman says, it would have been comparatively simple to have done that, why did not he or other Conservative Members table an amendment to that effect for this debate?

Mr. Letwin: We did not table such an amendment because of the problem of trying to table amendments at this stage.

Mr. Bendel: It is possible.

Mr. Letwin: Had I realised that it was possible, I would have done it.
The serious question is why our noble Friends did not table an amendment in the other place during their consideration of the Bill, when, manifestly, it could have been done. I know, from discussion with those who were responsible, why it was not done. I believe that our noble Friends concluded that the Government were never planning on accepting Lords amendment No. 64. My noble Friends' sole reason for forcing the amendment through in the other place was to make the point—when the Bill was considered in this place, so that debate was focused on the issue—that it is the proper prerogative of the House to debate money issues, and that it is quite wrong that such a provision should go through on the nod in another place.
It would have been perfectly appropriate for my noble Friends to table a deeming amendment, but it was not necessary for them to do so to achieve their objective. However, it is something which the Government could have done. If Ministers had said—there were repeated discussions on the matter—"We accept the burden of the amendment. We should like to table, by agreement, a further amendment deeming a benefit entitlement", I do not suppose—and I do not suppose that the hon. Member for Newbury supposes—that my noble Friends would have objected to it.
Such an amendment would have been acceptable and would have done the job, although perhaps not perfectly. Nevertheless, the possibility utterly kiboshes the Minister's assertion that there was insufficient time to make the change. There was time to do so. An amendment would have taken less than half an hour to draft, and less than half an hour for the House to pass. It would also have been acceptable to those tabling the amendment.
Why was such an amendment not tabled? One was not tabled—taking us back to the earlier assertions—because the entire procedure was so bizarre. The Government had no intention of allowing such a change to occur at this time—which takes us to the very point made by the hon. Member for Kilmarnock and Loudoun which I now propose to deal with.

Mr. Clifton-Brown: I wonder whether my hon. Friend agrees that part of the difficulty in developing the type of credit system that I mentioned in my speech is the knock-on effect of the gateway benefits that it would involve, such as housing benefit, council tax reduction benefit and other benefits? It is therefore not simply a matter of giving credits to those earning between £64 and £81 a week.

Mr. Letwin: I have given some thought to that matter, both during my hon. Friend's speech and before it, when considering the question of deeming. I do not think that a deeming clause would have had that effect, although I stand to be corrected by the Minister. My understanding is that passporting arises only when a benefit that carries a passporting entitlement is introduced. If what is deemed to have occurred is a contribution, I do not think that passporting arises. I may be wrong, but I think that is how it would work. The Minister will no doubt correct me if I am wrong.
We come now to the real question. I have taken care to dismiss the first part of the Minister's argument, which leaves us solely with the second. The argument has to be that we are irresponsible in having fostered the

amendment because the Chancellor of the Exchequer, in his wisdom, has decided that now is not the time for this policy—not, I stress, that it is a good policy made bad, as the Minister mentioned, because it could be unmade as a bad policy and made back into a good one by the simple deeming clause. No, the argument has to be solely that the Chancellor of the Exchequer, in his wisdom, has decided that now is not the right time to have introduced it; it is irresponsible on our part, it is alleged, to introduce what is effectively a spending measure, or negative revenue measure, at a time when the Chancellor has decided that it is not right to do so.

Mr. Browne: I greatly enjoy the hon. Gentleman's contributions although they always remind me of an Easter egg—they promise much in the packaging but have very little in the way of substance.
The criticism of the amendment from those on the Government Benches is not of the irresponsibility that the hon. Gentleman and his Front-Bench colleagues have locked into the Chancellor's thinking but of the irresponsibility in tabling such an amendment without facing up to its consequences. The amendment would generate a hole of £1.5 billion in revenue and would have consequences for the lowest paid, but the official Opposition are not prepared to face that.

Mr. Letwin: I am grateful to the hon. Gentleman for the kindness of his remarks about my speaking style and the substance of my speeches and also for making his point as he does, because his comments expose the problems with the arguments deployed by Labour.
We have already dealt with the question whether the amendment would cause a problem for the low-paid—with the deeming clause, it would not. The question is whether we are accused of being irresponsible in bringing forward a negative revenue measure at a time—the hon. Gentleman was very keen to point out in an earlier intervention that he was talking about timing and the Chancellor's view of timing—when the Chancellor does not regard it as sensible; or whether, according to the hon. Gentleman's new variant, we are irresponsible in bringing forward a negative revenue measure without proposing how to fill the gap. I shall deal with the first part first and the second second; if the hon. Gentleman has, by then, thought of a third variant, perhaps we can deal with that.
It is no part of the duty of the Opposition to be in sync—to use a ghastly phrase which has been used in my hearing by the Chancellor—with the Chancellor. The Chancellor has his views on timing and we have ours. That argument can be laid to rest.
The serious argument is the second variant deployed by the hon. Member for Kilmarnock and Loudoun although not, I think, by the Minister. I may be wrong about that; when we inspect Hansard, we might find that he did mention it and I did not hear him. The hon. Gentleman asserts that there would be a £1.4 billion hole in the Budget if this measure were introduced. He is no doubt extremely acute in matters of the economy and therefore needs to consult only the productions of his own Government which daily tell us about the Chancellor's surplus.
This is a Chancellor of the Exchequer who, for one reason or another—one may say it is through good planning, through inheritance or through luck—is in the


extraordinary position of having the terrible problem of what to do with all his money. He is collecting far more that he ever dreamed of. He is reducing the national debt by an extraordinary proportion. The previous Government had to do things which the then Opposition said was selling the family silver to reduce the debt to a similar extent. Although the Chancellor's privatisation programme, such as it is, is failing at the moment, he is nevertheless able not only to fill gaps and plug holes, but to remove great swathes of the national debt. Where is the hole?
If I may presume, I shall set out for the hon. Member for Kilmarnock and Loudoun what should have been his argument—the third variant.

Mr. Denham: Just out of curiosity, is the view that the hon. Gentleman is advocating on the question of the public finances that of the official Opposition?

Mr. Letwin: Unfortunately, neither the current shadow Chancellor nor the previous Chancellor is currently the Chancellor, but the previous Chancellor has said many times that were he Chancellor, he would not have stuck in an extraordinarily rigid fashion to every item among his own projections, which is what the Government are intending to do. I have no way of knowing what would have been the case, but I know that a great pile of money is sitting there. We are not talking about a cash shortage.
The serious argument, whether deployed by the Minister or the hon. Member for Kilmarnock and Loudoun, is very clear. They must be asserting not that there is a hole in the Budget but that serious macro-economic consequences would arise from a decision to produce a revenue negative measure of this scale on top of what is already produced. That must be the shape of the argument. They did not put it that way, but it must be what the Government are asserting. It is the only intellectually respectable argument.
Obviously there are doubts and disagreements. None of us is perfect at projecting macro-economic effects, but it is probably the unanimous view of Opposition Members and I suspect, if they examine their souls, of the great majority of Labour Members, that the Chancellor's fiscal stance today is too tight in macro-economic terms. Certainly, I have heard Labour Members make eloquent pronouncements about the effect on the manufacturing sector of the current combination of a fiscal squeeze and an exchange rate squeeze. Under circumstances of very tight money, a very tight exchange rate and a very tight fiscal stance, there is ample evidence that the current recession in the manufacturing sector will continue and intensify.
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It is no part of the Opposition's argument to suggest that we should have too loose a fiscal stance, but, under circumstances where there is ample cash available, the national debt is decreasing and there are good economic arguments for supposing that the fiscal stance is too tight, it is perfectly responsible to introduce such a measure. I see nothing irresponsible in that; nor is it irresponsible to have introduced an amendment that needs to be debated in the House and not by subterfuge in another place; nor

is it irresponsible at least to probe, as an Opposition must, whether the fiscal stance is too tight. Nor can it be asserted—as I have laboured mightily to establish—that there is any mechanical difficulty involved in restoring the benefit entitlement of those between the £64 and £81 limits. Consequently, I utterly refute the suggestion that there is the slightest irresponsibility entailed in amendment No. 64 or any need for amendment (a).
On the contrary, what is happening is clear. The Chancellor of the Exchequer made efforts with Mr. Whelan to mislead the British public by saying one thing in his Budget speech, by promoting and fostering an opinion in the press, by not correcting that opinion and by subsequently revising the truth through a press release—all with the intent of creating a euphoria that he then denied and sought to minimise in public by a back-door route of legislation in another place with the shortest possible debate here and with an accusation against the Opposition, no doubt dreamt up at a later date by the spin doctors, that we were being irresponsible even in raising the issue. That accusation is without substance, particularly in the light of the fact that it has at least served the purpose of bringing the matter to the attention of the House where it properly belongs.

Mr. Browne: I had not intended to speak in this debate, but I have been driven to do so—[Interruption.] Therefore, hon. Members are responsible for the fact that they have to suffer me for the next few minutes.
I have been amused and entertained for the past couple of hours, and I am sure that that was at least part of what Opposition Members intended to do with the froth of a debate that they have foisted on the House. I was mostly amused by the hon. Member for Cotswold (Mr. Clifton-Brown), who described the Bill as a measly Social Security Bill. Hitherto, I have heard it described as the Peter Lilley memorial Bill, so perhaps the subtitle of a measly Social Security Bill is appropriate, given the provenance attributed to it by the Opposition.
If I understood the thesis put forward by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)—in the words of my hon. Friend the Member for Bolsover (Mr. Skinner), he made a four-course meal out of a pan of boiling water, repeated by the hon. Member for West Dorset (Mr. Letwin)—he accused my right hon. Friend the Chancellor of the Exchequer of taking advantage of a 48-hour window of public credibility. The Chancellor is accused of taking advantage of that 48 hours to mislead the public and create a false acceptance and bonhomie for his Budget, by deliberately using the word "further" instead of "future" in his Budget speech, having beforehand tested that subterfuge on the public in focus groups. Have I understood the accusation?

Mr. Letwin: Yes.

Mr. Browne: That accusation was immediately undermined by the hype from the hon. Member for Grantham and Stamford (Mr. Davies), who flashed before us a press release with the word "future" in place of "further", which he argued was issued within minutes of the Chancellor sitting down. If the hon. Gentleman's copy is correct, the press release, which was, no doubt, designed to give all members of the press the information that the Chancellor intended to convey in his speech—


indeed, the hon. Gentleman portrayed it as a word-for-word record of the Chancellor's speech—clearly used the word "future".
The issue of that press release within minutes of the Chancellor's speech, and clearly therefore within the 48-hour window, grossly undermines the whole thesis that the hon. Member for West Dorset has constructed on a bed of sand, simply because Conservative Members do not seem to understand the definition of "further".

Mr. Letwin: I am grateful to the hon. Gentleman, with whom I always enjoy debating, for giving way. Does he agree that if the purpose of the press release was to change the minds of members of the press and make it clear that reforms would take place in the future, it is a little odd that Mr. Whelan—who, as far as we know, was awake and present on Budget day—did not make the slightest effort to persuade editors to read it in that light?

Mr. Browne: I have no way of knowing what Mr. Whelan said in conversations that he may or may not have had with economic journalists. Having sat through and listened carefully to the debate, I am merely trying to distil the evidence put before the House by Conservative Members to support their argument. Two successive contributions contained contradictory evidence from the same witnesses, which grossly undermines that argument.
I leave the public and those who will read Hansard tomorrow to make up their mind whether the argument of the hon. Member for Chingford and Woodford Green, who spoke from the Conservative Front Bench, stands the test of a Conservative Back Bencher's analysis. I suggest that those who want to do so—there will be some—consider carefully the contribution by the hon. Member for Grantham and Stamford and his reference to the press release.
I may be over-simplifying the matter, but if the press release containing the word "future" was issued within minutes of the Chancellor sitting down, no one was trying to take advantage of a 48-hour window to mislead anyone.

Mr. Letwin: I find the hon. Gentleman's naivety charming, and it does him credit. I ask him to imagine, for a moment, being inside the mind of someone so utterly different from himself as Mr. Whelan. Might it not enter his mind to foster an impression, to have a record that contradicts it, but not to correct that impression among journalists?

Mr. Browne: This is the first time that anybody has accused me of being charming. [HON. MEMBERS: "Ah."] It is sad to have reached this age and never have been accused of being charming.
I have no doubt that the hon. Member for West Dorset is far more capable than I am of analysing the mind of the fictitious Machiavellian character that he has created.
I am analysing the diversion to which we have been subjected for the past couple of hours because, with one or two notable exceptions, the Opposition—as they usually do in social security debates—are seeking to divert attention from the fundamentally beneficial effects on the structure of the national insurance contributions scheme for employees and employers that the Government seek to introduce from April next year. That is the intention of the bulk of the amendments. I make

that general criticism, but exclude individuals from it because at least some hon. Members could not bring themselves to continue the charade to which we have been treated without having to concede that point.

Mr. Swayne: Will the hon. Gentleman reflect on whether tabling amendments in such a way as to implement what the Red Book describes as the most fundamental reform since 1975 is a proper way in which to deal with the measures to which he referred?

Mr. Browne: I am grateful to the hon. Gentleman, because I shall reflect on that very subject in due course. Indeed, the Minister dealt with that issue directly in his opening remarks.
The Opposition are seeking to divert attention from the Chancellor's measures. They seek at every turn to divert attention from one of the Government's driving forces. We are debating but one of a package of measures that are designed to help the low-paid and get those who are not in work into work. That the Opposition divert attention in such a fashion by seeking to accelerate a change, when it must have been very clear to them and anyone else who looked at the Chancellor's speech that my right hon. Friend intended to introduce the same change at some future date when the preparatory work had been done, is very obvious. They do so despite the valiant attempts by the hon. Member for West Dorset to explain why the Lords amendment is not reckless or irresponsible. They do so mindless of the damage that legislation in such a form would do to the very people whom the Government's changes are designed to benefit.
The damage that the Lords amendment would do has already been catalogued and debated, particularly by my hon. Friend the Minister, but it bears repeating. Without a deeming measure—the sort of Saturday afternoon matinee legislation that the hon. Member for West Dorset suggested very late in the debate—it would prevent 1 million low-paid workers from having access to contributory benefits. Although I am not in a position to judge the hon. Gentleman's suggestion of a deeming measure without giving it greater consideration, I suspect that the issue cannot be as simple as that. We cannot be tied up on the railway tracks one Saturday, and the next Saturday, with one bound, be free. It is no answer to the reduction in the £1.5 billion hole inside the Easter egg to say that the Government seem to be doing a fair enough job with the economy and there seems to be more money than some anticipated, so some of it can be used to fill the gap.
It is no part of the Opposition's role to be in sync—as the hon. Member for West Dorset said—with the Chancellor's thinking. They must respect that it is the Chancellor's prerogative to make decisions about the management of the economy when he is in government, which relate to his and the Government's priorities. If the Government's priorities are to run the economy efficiently, to try to squeeze out inflation, to try to level off the economy to avoid boom and bust and to pay back some of the crippling debt that they inherited, they happen to be priorities of the people, too. They happen to be the appropriate priorities.

Mr. Hope: Will my hon. Friend give way?

Mr. Swayne: rose—

Mr. Browne: I am giving way to my hon. Friend.

Mr. Hope: My hon. Friend mentioned earlier the 1 million low-paid workers who would suffer as a result


of the Opposition's proposals. Is he aware that four fifths of those low-paid workers are women, so it is women who would cease to build up their rights to jobseeker's allowance were we to pursue those proposals? They would also lose the ability to build up their rights to incapacity benefit, maternity allowances and even the basic state pension. What the Opposition want to do would be a fundamental attack on some of the poorest women in the nation.

Mr. Browne: My hon. Friend makes an important point. Clearly, it is part of the Government's strategy to deliver work for the low-paid and to make it pay. That will be significantly to the advantage of women. It is no surprise that such damaging effects can be proposed by the Opposition in such a cavalier fashion, because at every turn in the short history of the Labour Government, when the Government have tried to introduce measures to bring work to workless people and to make that work pay, the Opposition have opposed them.

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Mr. Duncan Smith: I sense that the hon. Gentleman is beginning to tie himself up in knots. He and his hon. Friends are trying to say what a terrible business the proposals are, while maintaining that their Chancellor never gets anything wrong. May I ask him a simple question? What does he think the Chancellor was trying to do when he announced to the public, by making a speech in this place and through the radio and the other media, including the press, that further changes—changes that the hon. Gentleman says that he does not like—would be made, although there was no provision in the Red Book for them, at least in the lifetime of this Parliament?

Mr. Browne: I am grateful to the hon. Gentleman for giving me the opportunity to share my interpretation of the Budget speech with the House—although I hasten to add that I have not had the benefit of discussing it with my right hon. Friend the Chancellor. In my interpretation, the Chancellor was laying out in the Budget, not only in specific terms for the immediate future but, in general terms, the direction in which the Government were moving. He was giving both employers and low-paid employees the maximum notice of where the Government were going.
When the whole speech is read, it is clear that my right hon. Friend was saying that those objectives would be achieved when the circumstances were right and the preparatory work had been done.

Mr. Duncan Smith: The hon. Gentleman is now saying that his right hon. Friend was being utterly irresponsible when he raised in the Budget speech expectations on which, because he understood the difficulties, he had no desire to deliver. The hon. Gentleman has already mentioned those difficulties, and has criticised the Opposition for advancing our proposals because, apparently, they would damage so many people. Yet, at the same time, he says that the Chancellor was right. Surely the Chancellor was wrong, and was hurting

people in raising those expectations. That is what the hon. Gentleman has just said.

Mr. Browne: The hon. Gentleman, not for the first time in the debate, misunderstands what has been said—but that may be my fault. I criticise the Opposition for supporting the Lords amendment because they are trying to make the change now, when the preparatory work has not been done, and they are mindless of the consequences for a significant number of people.
I do not expect the Chancellor to introduce legislation to achieve the objective at any time in the future until the preparatory work has been done. I do not accept that my right hon. Friend was being irresponsible in any way. He was raising legitimate expectations—expectations which the Government will fulfil—

Mr. Duncan Smith: rose—

Mr. Browne: No; the hon. Gentleman has, in his own words, had his moment in the sun.
I shall talk about the positive benefits of the other amendments shortly. No one can be in any doubt about the Government's commitment to the creation of employment. It is a crucial part of that strategy that we make work pay, especially for the low-paid. As I have said, every aspect of the package of measures that we have introduced over the past year to create work and to make it pay has been opposed root and branch by the Opposition. They opposed every aspect of the new deal, they opposed the minimum wage legislation and they will no doubt oppose the national child care strategy.
Reform of the national insurance system is an integral part of that package, and these measures are designed to achieve that reform. As my hon. Friend the Minister has explained, they will do that by increasing the take-home pay of every employee who at present pays national insurance contributions—and I willingly accede to that objective. They will reduce bureaucracy for employers and, in so doing, encourage them to take on more workers. The fact that the measures have appeared in a relatively short time is a remarkable achievement by the Government. The Government did not introduce the changes willy-nilly, but conducted a tax and benefit review that examined all the consequences of the package and concluded that this was the appropriate way forward.
Some Opposition Members have welcomed the package, but others have carped about it. They claim that it has arrived too late in what they have described as this measly Bill. They do not believe that this legislation is the appropriate vehicle for the measures, but it clearly is. The package did not need separate legislation: it needed to be inserted in a Bill that contained substantial references to national insurance. The Social Security Bill provided a ready-made vehicle. It gives the maximum notice to employers that the changes will be implemented next year. It ensures that the Government will meet our target of April 1999 and that the people at whom the measures are targeted will enjoy maximum benefits for a maximum period. For those reasons, I welcome the Government amendments.

Mr. Howard Flight: This is an important debate about two issues. The first is a major reform of the national insurance arrangements.


The second is about the conduct of government: should it be open and straightforward or does it involve governing by deceit in order to maximise propaganda?
The speeches by my hon. Friends the Members for Chingford and Woodford Green (Mr. Duncan Smith) and for Grantham and Stamford (Mr. Davies) exposed the fact that a deceit has clearly been perpetrated. I listened to the Chancellor's speech, and I was left with the clear understanding that the reforms to the national insurance arrangements following the Taylor report would affect both sides of the fence. I believed that they would raise the starting level of employers' contributions from £64 to £81 and would raise to £81 the level beyond which individuals paid class I contributions. That is what the major newspapers reported and it is what I think the public still believe to be true. They will be quite surprised to discover that the wool has been pulled over their eyes.
This package of measures has been tacked on at the end of the Bill in order to avoid full debate and exposure by the press. It is an attempt by the Government to pass the measures quietly without attracting attention. The Lords amendments are designed to expose that fact—we know that they cannot succeed. Labour Members have argued that the amendments should not have been made without first considering their consequences. Why did the Chancellor put his important proposals on the menu—including reducing disincentives to work—when he did not know how he would fund them? The Red Book has disclosed that there is no provision to fund those proposals in this Parliament.
What is the Government's position? Do they still seriously propose to reduce employees' contributions, so that contributions are paid only after £81 a week is earned, or was that a propaganda exercise?
All hon. Members share the objective of reducing disincentives to work. One of the most important aspects of the Budget was the proposal to remove the entry fee under the national insurance arrangements, so that employees' contributions would be significantly reduced—the lower paid would not begin to pay until they had earned £81 a week. The reforms would be more important for the employee than for the employer, as they would reduce disincentives to work. As my hon. Friends have said, astronomically high marginal rates of tax can be incurred when incomes rise at the lower end of the earnings scale. Bluntly speaking, we must encourage those who know how to obtain the most from the social security system to look for work. The level at which they have to start paying national insurance may be a disincentive to them.
For employers, the reforms represent a simplification. The Red Book makes it clear that, for them, the net cost of the reforms in contributions is virtually zero. The different scales will be phased out, to be replaced by the one scale that will take effect at £81—the old minimum scale took effect at £64.
There are pluses and minuses to the arrangements that the amendment would implement. People at some income levels will have incentives to work, whereas those at other levels will face disincentives. Worryingly, the disincentives will apply to those who are at the medium-skilled end of the market.
Like the public and the informed media, I welcomed the national insurance reforms on the understanding that the minimum level for contributions would be raised to

£81 a week for both employee and employer. Candidly, I am shocked to find that, for employees, the proposal seems to have been no more than a devious propaganda trick.
I do not understand what the Chancellor wants to achieve. The Red Book seems to show that there is little prospect that the proposals for employees will be put into effect during this Parliament, yet that is the most important way in which to create incentives to work. Moreover, it is what the Chancellor has led the least privileged in society to expect. Was that a cheap propaganda trick? Was the Chancellor misleading himself? Did the Treasury fail to cater for the financing of the proposal?
The Taylor report makes it clear that the aim of national insurance reform is to benefit both employers and employees. As my hon. Friends have said, there is no substantial fiscal constraint to prevent the Government from biting the bullet and applying the reforms to both employers and employees. The Government are spending generously on work provision for the young, but that expenditure is not needed, as unemployment among young people has turned out to be much lower than expected.
The thrust of the Government's propaganda has been that the Budget will get people into work—it will provide incentives and remove disincentives to work.
I am extremely concerned that the family credit proposals, some of which are positive, also contain significant disincentives. The net effect of the reforms is that, for a woman, it will be worth having a husband only if he earns at least £400 a week. That is undesirable in terms of supporting the family unit and crazy in terms of incentives to work.
I thought that the national insurance reforms were to be about getting rid of disincentives to work, but they are merely about simplifying the arrangements on the employer side and doing nothing on the employee side.
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The Lords amendment is clearly designed to expose a deceit in the Budget statement—an intention to pull the wool over people's eyes. It sends a message to the Government that they must get on with putting that right. That is not such a difficult task; it could be addressed within six weeks if the Government really intended to do something. The issue is whether they are willing to spend the money and whether that expenditure is a top priority.
I believe that getting rid of disincentives to work should be a top priority for any Government committed to helping the less-privileged. The Government should get on, for goodness' sake, and do what they have led the people of Britain to believe that they would do.

Mr. Hope: I urge the House to support the Government amendment, because to do otherwise would be to hurt the low-paid and future pensioners. The Bill is a key part of modernising the welfare state and the social security system, a task which the Conservatives signally failed to perform in their 18 years in office. Far from supporting the Government in their endeavours to make the system fairer and more efficient, Conservative Members are seeking to undermine the measures and hurt those least able to defend themselves.
If the Government amendments are not made, 1 million low-paid people, many of them women, will be taken out of the reach of contributory benefits and will suffer, as they cease to build up their rights to benefits such as jobseeker's allowance, incapacity benefit and maternity allowances. The value of state earnings-related benefits would reduce if we went down that route. The amount paid in contracted-out pensions for millions of people would be reduced, and about £1.5 billion less would come to the Treasury in national insurance contributions.
The Lords amendments are designed not to expose the Government but to be vindictive and wrecking. Their effects would be unacceptable, indecent and simply wrong. They are irresponsible and border on hypocrisy.
The Government have said that future reforms will raise to the level of the single person's tax allowance the point at which employers start to pay national insurance, but that that will not happen until measures are in place to protect the benefit rights of those earning between £64 and £81 a week, who will no longer pay contributions.
It is not and never has been the Government's intention to make the change from April 1999. I am sure that the record will show that to be the case. The Government want to introduce the measures on both sides of the equation in due course. Labour Members find it impossible to take Conservative Members seriously when they say that they would support measures that, quite frankly, they would never have introduced had they been in government.

Mr. Swayne: The problem was that we thought that those measures had been introduced. The Daily Telegraph and the Financial Times thought that they had been introduced. What was so galling was to have the feast swept from under our noses.

Mr. Hope: I thank the hon. Gentleman for his intervention, although it would be helpful if he knew what he was talking about. What he said is untrue. The Opposition's amendments are not resulting in a serious debate on reform of the social security system but in rank opportunism, utter insincerity and complete humbug. When the Government introduce measures on both sides of the equation to ensure that the lowest-paid people benefit, it will be interesting to see how the Opposition vote. Many other amendments affect national insurance contributions, housing benefit and measures to help disabled people who want to work, which form part of the Bill.

Mr. Swayne: As the hon. Gentleman shows considerable interest in how we might vote when the Government introduce those measures, can he hazard an estimate on when that might be, so that we can consider how long we have to work on it?

Mr. Hope: We shall introduce the measures when the time is right. What we are debating, and what Opposition Members deliberately avoid discussing, is the measures that we are putting in place to restructure national insurance contributions. Employees will no longer have to pay a 2 per cent. entry fee as soon as their wages reach

the lower earnings limit. They will pay national insurance contributions only on the portion of earnings that exceeds the lower earnings limit and is below the upper earnings limit. That will save them £1.28 a week, which the previous Government signally failed to do. Indeed, they had no intention of helping the low paid.

Mr. Swayne: The hon. Gentleman is concerned about our inability and unwillingness to debate the proposals. Would it not have been better if the Government had dealt with the proposals properly instead of tagging them on to this Bill, halfway through its progress through the Lords, so that they could have received the proper attention that he desires?

Mr. Hope: Those measures are included in the Bill to give businesses the necessary time to revise their payroll arrangements, and so that we can allow people to benefit from the measures as quickly as possible. Does the hon. Gentleman suggest that we should not have put the measures in place, thereby delaying some of the benefits that they will bring? Perhaps that is exactly what the Opposition believe.

Ms Patricia Hewitt: Does my hon. Friend agree that if Conservative Members had not spent so much time debating a measure that we do not propose to make in this Bill, they would have had ample time to debate the measures that we are including in the Bill and will bring into effect from April next year?

Mr. Hope: I could not have said it better myself. I hope that Conservative Members are listening to the points being made in this debate, because they are doing themselves no favours, in the eyes of the House or the public, by proposing spurious amendments designed to wreck a Bill which will benefit those most in need and bring about a system that genuinely helps those who need it.
I suspect that when people see the crocodile tears that Conservative Members are shedding, they will know whom to trust when they consider their choices in the future. It is a shame that Conservative Members have chosen to pursue amendments that would not only damage people's lives, but have not been costed and demonstrate what I can only describe as a shallowness and lack of genuine concern to build a modern, efficient and fair welfare state.
It is a pity that, rather than offering constructive and supportive contributions on the changes that are needed, the Opposition are treating the income of millions of people as a political football with which to score cheap political points across the Chamber.

Mr. Clifton-Brown: I can hardly believe what I am hearing. Is the hon. Gentleman defending a change in the national insurance system that is so mean minded that someone earning under £81 a week faces a tax reduction of about £1.10 a week? If he is defending that in terms of the low-paid, I shudder to think how they and the disadvantaged will fare under the Government in future years.

Mr. Hope: It is strange to hear Conservative Members telling Labour Members about defending the low-paid, when the Tories signally, deliberately and purposefully


opposed a national minimum wage, root and branch—and kept us up all night to do so. No one will take lessons from the Opposition on supporting the low-paid. As a result of the Bill, the low-paid will be £1.28 a week better off, not worse off.

Miss Kirkbride: Does the hon. Gentleman accept that one of the greatest achievements of the Conservative Government was to bring down the marginal rate of tax, which considerably improved the take-home pay of the low-paid? The measure that we support goes even further in that direction.

Mr. Hope: We inherited a shambolic welfare state. The people in most need were not receiving the benefits, support and security that they should have received. For example, 1 million pensioners were not claiming income support to which they were entitled, and were abandoned by the Conservative Government. Having inherited a shambolic welfare state, the Government have embarked on a radical set of reforms and the Bill is paving the way for their introduction. They will bring back support and work for those who can work and security and dignity for those who cannot.
We inherited a welfare state in which people were trapped on benefits and not receiving the resources that they needed—the public did not support it—and a social security system that treated its customers as a burden rather than as people who needed help. The Bill paves the way for ending that.
The Government amendments are essential to the success of our reforms of the welfare state. We shall propose further measures as our programme of reform is implemented. It will be an exciting three or four years as, year on year, we table proposals for change that will dramatically increase the quality of people's lives, especially those of the poorest in our community. We shall not be swayed from that task, that vision and that commitment by an Opposition who not only lack vision and commitment, but prefer to play dangerous games with people's lives.

Miss Kirkbride: The Bill will not achieve any of the great reforms to the welfare state that the hon. Member for Corby (Mr. Hope) thinks that it will. It will introduce an appeals procedure that will truncate the rights of his constituents to gain the benefits to which he thinks they are entitled. He cannot claim that the Bill represents great reforming zeal and that it will transform people's lives, as he would have us believe.
The hon. Gentleman accused Conservative Members of seeking to wreck the Bill through the Lords amendments. We are trying to improve the Bill, and improve it considerably, for precisely the people he claims to want to protect and whose living conditions he wants to enhance. I support my hon. Friends, who spoke eloquently to the Lords amendments and against the Government's arguments. The Government have shamefully misled the general public and the newspapers about their intentions for the lower-paid.
The whole argument rests on the difference between "future" and "further". I can only claim to have been a Member of Parliament since May 1997, when I had the great good fortune of winning for the Conservative party in Bromsgrove; however, before that, I had considerable

experience of the ways of the House as a Lobby correspondent and from working in the House in various capacities. It is only too clear to me what Ministers mean when they choose to say either "future" or "further".
9.30 pm
If a Chancellor says in a Budget speech that he intends to make "further changes", that is code for every single person who has experience of the House to report that those changes will take place when the Finance Bill is in Standing Committee, and that they will be embodied in that Bill, which is before the House in that financial year. Therefore, it could be expected by everybody who listened to the Chancellor's words that the measures promised in those words would be enacted in the same financial year. Although I have many criticisms of our Chancellor, lack of intelligence is not one of them, so I simply cannot believe that he was not perfectly aware of the word he chose when he said "further" in his Budget speech.
If the right hon. Gentleman had said "future", as it is now claimed he intended to say, that would have meant something entirely different. The future is exponential—it never has a due date in the House. It is an intention that, however honourable, has no financial reckoning. It is something that might not even happen within the lifetime of a Parliament. It is a good intention expressed by a Government, but it is certainly not an intention that anyone would take seriously until they saw it in black and white on the face of a piece of legislation. I cannot believe that the Minister does not understand that that is the difference between the uses of those two words.
I am therefore minded to agree with my hon. Friends, who have spoken so eloquently tonight, that there was a deliberate attempt to confuse the journalists who sit upstairs in the Gallery into believing that the Chancellor intended to make the changes this year. My hon. Friend the Member for West Dorset (Mr. Letwin) spoke magnificently about the whys and wherefores of the relationship between Ministers and the press. I know from my days working in the national media that there is a new element in that relationship: not only do we have to take Ministers out to lunch to try to ascertain their intentions for future legislation, but, if we are serious journalists, we have to try to get ourselves on to one of the focus groups, because if we succeed in doing so, we shall find out the Government's intentions and be able to manipulate those intentions by our reactions to the various proposals put before us.
I can quite believe that the Chancellor saw the value of saying that he intended to make changes to employees' national insurance contributions in the Budget, and that he deliberately allowed that intention to be expressed to our national newspapers on Budget day. Recalling my time on The Daily Telegraph, I know only too well the intense briefing and spinning that goes on in the Corridors upstairs on Budget day and on any other day a major Government announcement is made. Given the sort of press coverage that the changes got, it is simply inconceivable that they were not cross-referenced with the Government spin doctors—Charlie Whelan, perhaps Alastair Campbell himself and others. It is not possible that, in respect of a major and significant change—one of the most well-focused changes in the Budget—journalists would not have asked whether the Chancellor meant to say "further".
I am sure that, while not actually lying to members of the press, the spin doctors deliberately turned a blind eye to the presentation that they saw the press would give the facts the following morning. As we saw, even my former newspaper announced the intention—this year's intention by the Government—to make the changes to reduce employees' national insurance contributions. We also read it in the Financial Times—the doyenne in the Lobby of those who understand a balance sheet and whose journalists would know the import and intention of the measures.
There was also confusion on the radio about precisely what the Government intended. It comes as no surprise to me that the Government, who were very good at manipulating the media even before their election, allowed their supposed intention to fester in the minds of the public in order to gain credibility and acceptance.

Mr. Clifton-Brown: I am sorry to interrupt my hon. Friend, but I fear that she may be being too kind to the Government. I do not think that there was any media spin to create a warm impression of the Budget; I think that it is a question of the Chancellor's pure incompetence in not ensuring that his statement was in concert with the Red Book.

Miss Kirkbride: I do not wish to disagree with my hon. Friend. The fact remains that there is a huge dichotomy between what was said and what is now going to happen, and only our personal convictions and—perhaps—prejudices can suggest to us why that is so. Certainly, in the light of my experience of the relationship between Ministers and the press, I do not find it surprising.
The Under-Secretary's defence of his Government's position was the most disingenuous statement that I have ever heard. First, we were told how dreadful it was that we had pinched the Chancellor's idea; then, in the next breath, we were told what a terrible idea it was. I am still trying to get my mind around the peculiar message that the Government are sending us, which has been repeated by many of the Under-Secretary's hon. Friends. Something cannot be a good idea when voiced by the Chancellor and a terrible idea when the official Opposition seek to put it into practice by means of a Lords amendment.
Many Labour Members have criticised Conservative Members for not being particularly robust about low pay. I consider this the most important Bill that the Government could have introduced because, unlike the minimum wage—which may well destroy jobs—it will enable people who want to work to afford to do so. I urge the Minister to consider our arguments and the Lords amendments in a more favourable light.

Ms Hewitt: The hon. Member for Bromsgrove (Miss Kirkbride) reminded us that she was a journalist before she entered the House. Perhaps that explains her obsession—although it does not necessarily explain that of many of her hon. Friends—with the activities of journalists and spin doctors.
I have listened to the debate with a mixture of fascination and deep horror. I was reminded of the years that I spent studying English literature at university, where

there was an obsession with textual analysis—but never, even in the rarefied atmosphere of Cambridge, did I encounter such a nit-picking approach as this. It is to no purpose to analyse "further" and "future", and what was said in this and that press release. Such an attitude betrays the fact that the official Opposition have no serious purpose in engaging in this lengthy debate.
We may have been entertained by much of today's proceedings, but I wonder how the debate has struck members of the public. I noticed that many young people who came here to observe the House of Commons in action—I suspect because they were equally appalled by much of the debate—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am sorry to interrupt, but the hon. Lady should know that nothing exists outside this Chamber.

Ms Hewitt: I am afraid that I betray my lack of experience here, Mr. Deputy Speaker, but it is the fault of the Opposition that they have given the appearance this evening that, for them, nothing exists outside the Chamber. That is a great shame.
The Budget presented by the Chancellor earlier this year contained a long series of proposals for radical reform of the welfare state—which we inherited in a shambles from the previous Administration. Considerable progress will be made as a result of this Bill and of the Tax Credits (Initial Expenditure) Bill, to which we return tomorrow. They will make changes that will enormously improve work incentives and help my constituents, from April next year, who are trapped either in unemployment or in low-paid jobs.
The Government will go on to make further changes, as the Chancellor said, in the future. I welcome those changes, and I commend the Government amendments to the House.

Mr. Burns: This has indeed been an extremely interesting and invigorating debate. The nub of the argument has been the Chancellor's comments in his Budget statement on the lower earnings limit for national insurance contributions. My hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) has powerfully exposed the Chancellor's shenanigans. My hon. Friends the Members for Grantham and Stamford (Mr. Davies), for Cotswold (Mr. Clifton-Brown), for West Dorset (Mr. Letwin) and for Arundel and South Downs (Mr. Flight) have all made powerful speeches exposing what went on during the critical 48 hours when the Government's spin doctors at the Treasury worked overtime to create an impression that was just an illusion.
I pay tribute to my hon. Friend the Member for Bromsgrove (Miss Kirkbride) for her elucidating speech. She used to be a journalist for The Daily Telegraph, so she is well aware of how spin doctors operate. They choose their words carefully when they want to convey a message. We are indeed grateful to her for exposing some of the hollow excuses proffered for the activities of Mr. Charlie Whelan.
I remind the House of the seriousness of the situation, although I can understand why Labour Members would like to downgrade the charges laid against them this evening: this is an issue of considerable embarrassment


for them. In his Budget speech the Chancellor announced that he would raise the lower earnings limit for national insurance contributions from £64 to £81—so much is beyond dispute. He said:
I am abolishing the perverse entry fee that every employee pays to be part of the national insurance system and, in doing so, I am cutting national insurance for every employee in the country … Further reforms will also ensure that no one pays national insurance for the first £81 of their weekly earnings. All employees earning between £64 and £81 will have their right to benefits protected."—[Official Report, 17 March 1998; Vol. 308, c. 1106.]
When I heard the Chancellor say that, I understood—as did members of the press—him to mean that the measure was to be part of a reform package—[Interruption.] The hon. Member for Corby (Mr. Hope) should listen for a minute and then take the time to go to the Library, where he will find that the front page of The Daily Telegraph the day after the Budget stated that no worker would pay national insurance contributions on the first £81 of earnings. Similar coverage of that element of the Budget speech can be found in the Financial Times of the day after the speech.
It is clear that many members of the public were left with the clear impression that the changes would be part of the total package of changes in national insurance contributions. The confusion was so great that, a few days after the Budget, the BBC programme "Money Box", which my hon. Friend the Member for Chingford and Woodford Green mentioned, did an item on it to help clear up the confusion that had been created by the Chancellor's statement. In an interview with Stuart Richie of Scottish Equitable, which I will repeat for the benefit of the Minister, so that, just for once, he will be able to answer my questions in his winding-up speech, the interviewer said:
a lot of people seem to think that they won't have to pay any National Insurance until their earnings hit eighty one pounds a week. I mean, even if I've been a bit muddled by this. But that's not quite right, is it?
Stuart Richie said:
No, the Chancellor got it a bit wrong in his speech and newspapers are actually still getting it wrong today".
The response from the interviewer was:
Yes, I notice the FT got that one wrong.
Mr. Richie went on to say:
Yes, the FT got it wrong and I think some others as well".
The quotation suggests that the statement in the Budget was a mistake on the part of the Chancellor. As it turned out, however, there was no mistake.
When he appeared before the Treasury Committee, the Chancellor was specifically asked by my hon. Friend the Member for Grantham and Stamford about this curious omission. The Chancellor's answer was staggering. He said:
I said: 'Future reforms will also ensure that no-one pays National Insurance for the first £81.' The word is 'future'. These are reforms we intend to make.
That is what the Chancellor told my hon. Friend—[Interruption.] If the hon. Member for Kilmarnock and Loudoun (Mr. Browne), instead of nodding his head, hoping for a job in a few weeks' time, listened to the references, he would be able to check all this in Hansard to understand the significance. It is clearly a bit above him tonight.
9.45 pm
The Chancellor is being economical with the truth. He never used the word future. The Official Report of the Budget speech clearly says "Further".
The Chancellor is only too well aware of the fact that the Budget speech is probably the most important speech that is delivered in the House during the parliamentary year. It is thoroughly prepared and looked over before it is delivered and anyone who has been a Minister will know that, immediately after it has been delivered, it is combed upstairs by civil servants to ensure that it is 100 per cent. accurate, so it is inconceivable that Hansard got it wrong and that the Chancellor said something else. The Chancellor made a mistake and is seeking to run away from that mistake.
Frankly, the real reason the Chancellor decided to include the statement in his speech is that he had the idea tested on focus groups—we have a Government of focus groups now. As the reaction was positive, he decided to press ahead with it for a soundbite in the hope that it would help to create the general feel-good factor for press coverage.
The Liberal Democrat spokesman, the hon. Member for Newbury (Mr. Rendel), said that he shared our concerns on this issue and agreed that people would now be disappointed—because they thought that they would benefit financially from what the Chancellor promised on national insurance contributions under £81 and would not now receive that benefit in the next 12 months—but, sadly, he then spoilt his remarks, because it became apparent that he had completely missed the point of the debate when he suggested that we should be grateful that the Government had misled the people and what on earth were we doing seeking to draw attention to that; we should have sat on our hands and said nothing about it. That seems an extraordinary raison d'être, but I suppose that anyone who has had the misfortune to fight a Liberal Democrat at a parliamentary election will understand that there is nothing comprehensive or consistent about their views. What does interest me is what will happen at 10 o'clock, if and when a Division is called.

Mr. Rendel: I am delighted that the hon. Gentleman has given me the chance to intervene. I thought that I had made it absolutely clear at the end of my speech that we would support the Government's amendment.

Mr. Burns: I am grateful to the hon. Gentleman. I admit to making the classic mistake of forgetting that we are in a state of coalition politics—the Liberal Democrats support the Government through thick and thin.
The Minister, in his opening speech—we await his closing speech—failed to deal with any of the important issues behind this sorry episode. I now specifically ask him to explain to the House, in his reply, why the Chancellor behaved in such a disingenuous way. Will he explain why national insurance for those earning less than £81 will not be cut when everyone expected it to be? Can he give some time scale for when the Government will do that? Will he also explain or repudiate the spin-doctoring behaviour of Charlie Whelan et al at No. 10 and No. 11 Downing street?
Because we believe that the Government have knowingly misled the public for party political reasons, we will vote against the Government's amendment that would reverse the measures that the Lords have put into the Bill.

Mr. Denham: The speech of the hon. Member for West Chelmsford (Mr. Burns) was in large part identical to the speech of the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)—the first example of the single transferable speech.
It is not good for a Government to face an Opposition as fatuous, vacuous, time wasting, leaderless and incapable of serious scrutiny as that we have faced tonight. My hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne) highlighted their irresponsibility towards public expenditure—£1.4 billion appears to be of no consequence to them. We now know why debt doubled under the Conservative Government. As we have seen tonight, they are an Opposition with nothing to say.
Two charges have been made. The first is that the Bill is being dealt with in the wrong place. Any doubts that there might have been about the way in which the Bill has been handled have been dispelled tonight. In four hours, the Opposition have shown that they are incapable of maintaining any serious critique of the policies that we are meant to be discussing.
The reality is that the measures mean that business has to implement major changes. It will have to revise its software and administrative procedures. If it has to rush those changes, that will cost it money. We did not want unnecessarily to limit the time that business had to implement the changes. We decided that, given the wide range of support for the measures, we should make use of the earliest available vehicle—this Bill. This allows time for debate in both Houses and gives business the time that it needs.
This Bill contained a substantial section concerning national insurance contributions before the introduction of the new clauses. It is the most appropriate legislative vehicle to introduce changes to national insurance. The changes have been widely welcomed and they need to be on the statute book quickly to provide employers with the time they need to make the changes.
The more serious charge was that the Government have deliberately misled the public about our intentions. I shall deal first with the Red Book. It is clear that when the proposals are introduced, the implications of the changes will be reflected in the Red Book at the time. It was obviously right and good for my right hon. Friend the Chancellor to indicate the direction in which the Government wish to move and the way we want to restructure national insurance in the future so that there is no misunderstanding about the Government's intentions.
The second charge was essentially that the constituents, specifically of West Dorset, of Cotswold and of Grantham and Stamford—generally Daily Telegraph readers of all constituencies—had been led to believe that there would be a larger reduction in their weekly income than was made.
I took the precaution of reading The Daily Telegraph of 18 March, the day after the Budget. It stated:
From the start of the 199–0 tax year, no one will pay National Insurance on the first £64 of weekly earnings, saving every employee £1.28 a week—£66.56 a year.

That was said in The Daily Telegraph not once, but twice. On the same page, it mentioned
the £1.28 per week saving created by the Chancellor's proposal to scrap what he called 'the entry charge' for National Insurance contributions.
Was that misleading? It was exactly what the Chancellor said in his Budget speech. He said:
from next April, 20 million employees in Britain will benefit by paying £1.28 a week, or £66 a year, less in national insurance."—[Official Report, 17 March 1998; Vol. 308, c. 1106.]
After four hours of debate, the official Opposition have failed to make a case that any misunderstanding could have arisen about the impact of my right hon. Friend's Budget on the pockets of 20 million employees. He stated in his Budget speech the exact cash amount by which every individual would be better off.
I am pleased to be able to tell the hon. Member for Bromsgrove (Miss Kirkbride)—who worked for The Daily Telegraph—that the Budget's impact was accurately reported by that newspaper not once, but twice, which is only what we would expect from a great national newspaper.
The entire basis of this debate, and of the debate in another place, was that the Chancellor had misled people about the amount by which they would be better off. The basis has been destroyed not only by the words of the Chancellor of the Exchequer but by the words reported twice, on the same page, by the one national newspaper that has been quoted as saying that the Government misled the public.
The proposition that the Chancellor misled the public is the whole reason why this debate has lasted for four hours. No criticism of the Government's policy has been made.

Mr. Burns: rose—

Mr. Denham: No. The hon. Gentleman did not give way in his speech, and I do not have time to give way now.
I believe that there will be considerable embarrassment among Opposition Members at the way in which their leadership has led them into today's ridiculous debate, chasing round and emptying the tea rooms and bars to find sufficient Members—who were not in the Chamber for the earlier part of the debate—to spin it out to 10 o'clock.
There was nothing of substance in the comments of the hon. Member for Chingford and Woodford Green. Moreover, he and his colleagues cannot escape the consequences of the measures that they will vote for at the end of this debate. They have confirmed that they will vote for measures that would remove up to 1 million low-paid people from contributory benefit rights. Those people's jobseeker's allowance, statutory maternity pay and pension rights would all be hit by the measures that the right hon. Gentleman and his colleagues will vote for.

Mr. Quentin Davies: Will the hon. Gentleman give way?

Mr. Denham: I shall not give way, because Conservative Members did not give way.

Mr. Davies: Will the hon. Gentleman give way?

Mr. Denham: No. [Interruption.] We have had—[Interruption.]

Mr. Deputy Speaker: Order. The hon. Member for Grantham and Stamford (Mr. Davies) must know that the Minister will not give way.

Mr. Denham: Today, we have had four hours of wasted debate. The Opposition must now face the consequence that they will vote—the country will see them voting—to remove benefit rights from up to 1 million low-paid employees, most of whom are women. Opposition Members must live with that. However, I am sure that Labour Members will use our majority to ensure that those benefit rights are protected.
When my right hon. Friend the Chancellor of the Exchequer judges that the financial circumstances are right to introduce further changes, we will ensure that the benefit rights of low-paid employees are protected. Such a measure must not be considered—as the hon. Member for West Dorset (Mr. Letwin) said—in half an hour; it will require careful consideration, which is precisely what we will give it. We shall also increase the benefits of moving from welfare to work, make all employees—but especially the low-paid—better off, and make it easier for employers to create jobs.

Question put, That the amendment to the Lords amendment be made:—

The House divided: Ayes 328, Noes 123.

Division No. 274]
[9.59 pm


AYES


Ainger, Nick
Casale, Roger


Ainsworth, Robert (Cov'try NE)
Chapman, Ben (Wirral S)


Alexander, Douglas
Chaytor, David


Allan, Richard
Chisholm, Malcolm


Allen, Graham
Church, Ms Judith


Anderson, Janet (Rossendale)
Clapham, Michael


Armstrong, Ms Hilary
Clark, Rt Hon Dr David (S Shields)


Ashton, Joe
Clark, Paul (Gillingham)


Atkins, Charlotte
Clarke, Charles (Norwich S)


Ballard, Mrs Jackie
Clelland, David


Barnes, Harry
Clwyd, Ann


Barron, Kevin
Coaker, Vernon


Battle, John
Coffey, Ms Ann


Beard, Nigel
Cohen, Harry


Beckett, Rt Hon Mrs Margaret
Coleman, Iain


Begg, Miss Anne
Colman, Tony


Benn, Rt Hon Tony
Cook, Frank (Stockton N)


Bennett, Andrew F
Cook, Rt Hon Robin (Livingston)


Benton, Joe
Cooper, Yvette


Bermingham, Gerald
Corbett, Robin


Berry, Roger
Cotter, Brian


Best, Harold
Cousins, Jim


Betts, Clive
Crausby, David


Blears, Ms Hazel
Cryer, Mrs Ann (Keighley)


Blizzard, Bob
Cryer, John (Hornchurch)


Blunkett, Rt Hon David
Cummings, John


Boateng, Paul
Cunningham, Rt Hon Dr John (Copeland)


Borrow, David



Bradley, Keith (Withington)
Cunningham, Jim (Cov'try S)


Bradshaw, Ben
Dafis, Cynog


Brinton, Mrs Helen
Dalyell, Tam


Brown, Rt Hon Nick (Newcastle E)
Darvill, Keith


Browne, Desmond
Davey, Edward (Kingston)


Buck, Ms Karen
Davey, Valerie (Bristol W)


Burden, Richard
Davies, Rt Hon Denzil (Llanelli)


Burgon, Colin
Davies, Geraint (Croydon C)


Burnett, John
Davies, Rt Hon Ron (Caerphilly)


Burstow, Paul
Dean, Mrs Janet


Butler, Mrs Christine
Denham, John


Byers, Stephen
Dewar, Rt Hon Donald


Caborn, Richard
Dismore, Andrew


Campbell, Alan (Tynemouth)
Dobbin, Jim


Campbell, Mrs Anne (C'bridge)
Doran, Frank


Campbell, Menzies (NE Fife)
Dowd, Jim


Campbell-Savours, Dale
Dunwoody, Mrs Gwyneth


Canavan, Dennis
Eagle, Angela (Wallasey)





Eagle, Maria (L'pool Garston)
Kidney, David


Ellman, Mrs Louise
Kilfoyle, Peter


Ennis, Jeff
King, Andy (Rugby & Kenilworth)


Etherington, Bill
King, Ms Oona (Bethnal Green)


Fearn, Ronnie
Kingham, Ms Tess


Field, Rt Hon Frank
Kirkwood, Archy


Fisher, Mark
Ladyman, Dr Stephen


Fitzpatrick, Jim
Laxton, Bob


Fitzsimons, Lorna
Leslie, Christopher


Flint, Caroline
Levitt, Tom


Flynn, Paul
Lewis, Terry (Worsley)


Follett, Barbara
Linton, Martin


Foster, Michael Jabez (Hastings)
Livingstone, Ken


Foster, Michael J (Worcester)
Livsey, Richard


Galloway, George
Lloyd, Tony (Manchester C)


Gapes, Mike
Llwyd, Elfyn


Gardiner, Barry
Lock, David


George, Andrew (St Ives)
Love, Andrew


George, Bruce (Walsall S)
McAvoy, Thomas


Gerrard, Neil
McCabe, Steve


Gibson, Dr Ian
McCafferty, Ms Chris


Gilroy, Mrs Linda
McDonagh, Siobhain


Godman, Dr Norman A
Macdonald, Calum


Goggins, Paul
McDonnell, John


Golding, Mrs Llin
McFall, John


Gordon, Mrs Eileen
McIsaac, Shona


Gorrie, Donald
Mackinlay, Andrew


Grant, Bernie
McLeish, Henry


Griffiths, Jane (Reading E)
McNamara, Kevin


Griffiths, Nigel (Edinburgh S)
McNulty, Tony


Griffiths, Win (Bridgend)
MacShane, Denis


Grocott, Bruce
Mactaggart, Fiona


Grogan, John
McWalter, Tony


Hain, Peter
McWilliam, John


Hall, Mike (Weaver Vale)
Mahon, Mrs Alice


Hall, Patrick (Bedford)
Mallaber, Judy


Hamilton, Fabian (Leeds NE)
Mandelson, Peter


Hanson, David
Marshall, David (Shettleston)


Harman, Rt Hon Ms Harriet
Marshall, Jim (Leicester S)


Heal, Mrs Sylvia
Martlew, Eric


Healey, John
Meacher, Rt Hon Michael


Heath, David (Somerton & Frome)
Meale, Alan


Henderson, Ivan (Harwich)
Merron, Gillian


Hepburn, Stephen
Michael, Alun


Heppell, John
Michie, Bill (Shef'ld Heeley)


Hesford, Stephen
Milburn, Alan


Hewitt, Ms Patricia
Miller, Andrew


Hill, Keith
Mitchell, Austin


Hodge, Ms Margaret
Moffatt, Laura


Hoey, Kate
Moonie, Dr Lewis


Hope, Phil
Moran, Ms Margaret


Hopkins, Kelvin
Morgan, Alasdair (Galloway)


Howarth, George (Knowsley N)
Morgan, Ms Julie (Cardiff N)


Howells, Dr Kim
Morley, Elliot


Hoyle, Lindsay
Mudie, George


Hughes, Ms Beverley (Stretford)
Mullin, Chris


Hughes, Kevin (Doncaster N)
Murphy, Denis (Wansbeck)


Hurst, Alan
Murphy, Paul (Torfaen)


Hutton, John
Norris, Dan


Illsley, Eric
Oaten, Mark


Jackson, Ms Glenda (Hampstead)
O'Brien, Mike (N Warks)


Jackson, Helen (Hillsborough)
Olner, Bill


Jamieson, David
O'Neill, Martin


Jenkins, Brian
Organ, Mrs Diana


Johnson, Alan (Hull W & Hessle)
Palmer, Dr Nick


Jones, Barry (Alyn & Deeside)
Pearson, Ian


Jones, leuan Wyn (Ynys Môn)
Pendry, Tom


Jones, Ms Jenny (Wolverh'ton SW)
Perham, Ms Linda



Pickthall, Colin


Jones, Dr Lynne (Selly Oak)
Pike, Peter L


Jowell, Ms Tessa
Pond, Chris


Keeble, Ms Sally
Pound, Stephen


Keen, Alan (Feltham & Heston)
Powell, Sir Raymond


Kennedy, Charles (Ross Skye)
Prentice, Gordon (Pendle)


Kennedy, Jane (Wavertree)
Prescott, Rt Hon John


Khabra, Piara S
Primarolo, Dawn






Prosser, Gwyn
Stinchcombe, Paul


Purchase, Ken
Strang, Rt Hon Dr Gavin


Quin, Ms Joyce
Straw, Rt Hon Jack


Radice, Giles
Stringer, Graham


Rammell, Bill
Stuart, Ms Gisela


Rapson, Syd
Sutcliffe, Gerry


Raynsford, Nick
Swinney, John


Reed, Andrew (Loughborough)
Taylor, Rt Hon Mrs Ann (Dewsbury)


Reid, Dr John (Hamilton N)



Rendel, David
Taylor, David (NW Leics)


Robertson, Rt Hon George (Hamilton S)
Temple-Morris, Peter



Thomas, Gareth R (Harrow W)


Robinson, Geoffrey (Cov'try NW)
Timms, Stephen


Roche, Mrs Barbara
Tipping, Paddy


Rogers, Allan
Todd, Mark


Rooker, Jeff
Touhig, Don


Rooney, Terry
Truswell, Paul


Rowlands, Ted
Turner, Dr George (NW Norfolk)


Roy, Frank
Twigg, Derek (Halton)


Ruane, Chris
Twigg, Stephen (Enfield)


Ruddock, Ms Joan
Vaz, Keith


Russell, Ms Christine (Chester)
Vis, Dr Rudi


Ryan, Ms Joan
Wallace, James


Salter, Martin
Walley, Ms Joan


Sanders, Adrian
Ward, Ms Claire


Sawford, Phil
Wareing, Robert N



Watts, David


Sedgemore, Brian
Whitehead, Dr Alan


Shaw, Jonathan
Wicks, Malcolm


Sheerman, Barry
Williams, Rt Hon Alan (Swansea W)


Sheldon, Rt Hon Robert



Simpson, Alan (Nottingham S)
Williams, Alan W (E Carmarthen)


Singh, Marsha
Williams, Mrs Betty (Conwy)


Skinner, Dennis
Willis, Phil


Smith, Rt Hon Andrew (Oxford E)
Wilson, Brian


Smith, Angela (Basildon)
Winnick, David


Smith, John (Glamorgan)
Winterton, Ms Rosie (Doncaster C)


Smith, Llew (Blaenau Gwent)
Wood, Mike


Smith, Sir Robert (W Ab'd'ns)
Woolas, Phil


Snape, Peter
Worthington, Tony


Soley, Clive
Wright, Anthony D (Gt Yarmouth)


Southworth, Ms Helen
Wright, Dr Tony (Cannock)


Spellar, John
Wyatt, Derek


Starkey, Dr Phyllis



Stevenson, George
Tellers for the Ayes:


Stewart, David (Inverness E)
Ms Bridget Prentice and


Stewart, Ian (Eccles)
Mr. Greg Pope.


NOES


Ainsworth, Peter (E Surrey)
Collins, Tim


Amess, David
Cormack, Sir Patrick


Arbuthnot, James
Davies, Quentin (Grantham)


Atkinson, David (Bour'mth E)
Davis, Rt Hon David (Haltemprice)


Atkinson, Peter (Hexham)
Day, Stephen


Beggs, Roy
Dorrell, Rt Hon Stephen


Bercow, John
Duncan, Alan


Beresford, Sir Paul
Duncan Smith, Iain


Blunt, Crispin
Emery, Rt Hon Sir Peter


Body, Sir Richard
Evans, Nigel


Boswell, Tim
Fabricant, Michael


Bottomley, Peter (Worthing W)
Fallon, Michael


Bottomley, Rt Hon Mrs Virginia
Flight, Howard


Brady, Graham
Forth, Rt Hon Eric


Brazier, Julian
Fowler, Rt Hon Sir Norman


Browning, Mrs Angela
Fox, Dr Liam


Bruce, Ian (S Dorset)
Fraser, Christopher


Burns, Simon
Garnier, Edward


Butterfill, John
Gibb, Nick


Chapman, Sir Sydney (Chipping Barnet)
Gillan, Mrs Cheryl



Gorman, Mrs Teresa


Chope, Christopher
Gray, James


Clappison, James
Green, Damian


Clark, Rt Hon Alan (Kensington)
Greenway, John


Clarke, Rt Hon Kenneth (Rushcliffe)
Grieve, Dominic



Hague, Rt Hon William


Clifton-Brown, Geoffrey
Hamilton, Rt Hon Sir Archie





Hammond, Philip
Paterson, Owen


Hawkins, Nick
Pickles, Eric


Hayes, John
Prior, David


Heald, Oliver
Randall, John


Heathcoat-Amory, Rt Hon David
Redwood, Rt Hon John


Hogg, Rt Hon Douglas
Robathan, Andrew


Horam, John
Robertson, Laurence (Tewk'b'ry)


Howarth, Gerald (Aldershot)
Rowe, Andrew (Faversham)


Hunter, Andrew
Ruffley, David


Jack, Rt Hon Michael
St Aubyn, Nick


Jackson, Robert (Wantage)
Simpson, Keith (Mid-Norfolk)


Johnson Smith, Rt Hon Sir Geoffrey
Soames, Nicholas



Spelman, Mrs Caroline


Kirkbride, Miss Julie
Spicer, Sir Michael


Laing, Mrs Eleanor
Spring, Richard


Lait, Mrs Jacqui
Stanley, Rt Hon Sir John


Letwin, Oliver
Steen, Anthony


Lewis, Dr Julian (New Forest E)
Streeter, Gary


Lidington, David
Swayne, Desmond


Lilley, Rt Hon Peter
Syms, Robert


Loughton, Tim
Tapsell, Sir Peter


Luff, Peter
Taylor, John M (Solihull)


Lyell, Rt Hon Sir Nicholas
Taylor, Sir Teddy


MacGregor, Rt Hon John
Tredinnick, David


MacKay, Andrew
Trend, Michael


Maclean, Rt Hon David
Tyrie, Andrew


McLoughlin, Patrick
Viggers, Peter


Madel, Sir David
Wardle, Charles


Malins, Humfrey
Wells, Bowen


Maples, John
Whitney, Sir Raymond


Maude, Rt Hon Francis
Wilkinson, John


May, Mrs Theresa
Willetts, David


Moss, Malcolm
Woodward, Shaun


Nicholls, Patrick
Young, Rt Hon Sir George


Norman, Archie



Ottaway, Richard
Tellers for the Noes:


Page, Richard
Mr. Nigel Waterson and


Paice, James
Mr. James Cran.

Question accordingly agreed to.
It being after Ten o'clock, further consideration of the Lords amendments stood adjourned.
Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, Consideration of Lords Amendments to the Social Security Bill may be proceeded with, though opposed, until any hour.—[Mr. Kevin Hughes.]
Question agreed to.
Lords amendments further considered.
Amendment (b) to the Lords amendment agreed to.
Lords amendment, as amended, agreed to [Special Entry].
Lords amendment No. 65 agreed to [Special Entry].

Clause 53

CONTRIBUTIONS PAID IN ERROR

Lords amendment: No. 66, in page 35, line 33, leave out ("a period falling in")

Mr. Denham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendments Nos. 67 to 70.

Mr. Denham: Amendments Nos. 66 to 69 will ensure that clause 53, which applies to contributions paid in error, is not applicable where the error has been


discovered and the contributions have been refunded to the contributor. The amendments also introduce drafting changes to improve the clarity of the clause. Those technical amendments do not impact on the purpose of the clause. Amendment No. 70 is a minor technical amendment to clause 56, which is designed to clarify the legislation. I commend the amendments to the House.

Mr. Waterson: I agree with the Minister that the amendments are largely technical. As he said, amendments Nos. 66 to 69 are purely technical and, as far as I can tell, ensure that the policy behind the clauses is what is delivered. They introduce references to "year 1", "year 2", and so on. Amendments to deal with where a mistake has been identified and a refund made in the relevant time limit are very sensible.
I should like to raise one or two questions. I hope that answering them will not detain the Minister long. Does he agree that the amendments, especially the reference to regulations on when the section will become effective, extend the Government's regulatory powers? Is he able to tell us today when the Government intend the sections to come into force? How does he think that the clauses and the amendments fit the Government's approach to back dating in other parts of the Bill, which we shall come to very shortly?

Mr. Denham: The reference to the coming into force of section 56 reflects the fact that different parts of the Act will come into force at different times. Some sections will come into force on Royal Assent, such as the provisions on restrictive covenants in clause 50. Other sections, including section 56, will be brought into force by way of a commencement order. Amendment No. 70 makes it clear that the period referred to in clause 56(7B)(8) is the period before section 56 is brought into force by way of a commencement order.

Lords amendment agreed to.

Lords amendments Nos. 67 to 73 agreed to.

Clause 67

RATES OF SHORT-TERM INCAPACITY BENEFIT

Lords amendment: No. 74, in page 46, line 4, leave out ("£62.45") and insert ("£64.70")

Mr. Denham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to discuss Lords amendment No. 75. I should inform the House that these amendments involve privilege.

Mr. Denham: Amendments Nos. 74 and 75 change references to amounts of benefit in clause 67 to reflect the increased rates of benefit provided for by the social security benefit uprating order of 1998. They are purely technical, and I commend them to the House.

Lords amendment agreed to [Special Entry].

Lords amendment No. 75 agreed to [Special Entry].

New clause

Lords amendment: No. 76, after clause 67, to insert the following new clause—Validation of certain housing benefit determinations—

".—(1) Subject to subsections (3) and (4) below, in so far as a housing benefit determination made before 18th August 1997 purported to determine that housing benefit was payable in respect of—

(a) charges for medical care, nursing care or personal care; or
(b) charges for general counselling or any other support services,

it shall be deemed to have been validly made if, on the assumption mentioned in subsection (2) below, it would have been so made.
(2) The assumption is that, at all material times, such charges as are mentioned in subsection (1) above were eligible to be met by housing benefit where the claimant's right to occupy the dwelling was conditional on his payment of the charges.
(3) Where the effect of a review carried out on or after 18th August 1997 was to revise the amount of housing benefit payable in respect of any validated charges—

(a) the revision shall be deemed not to have been validly made in so far as it had the effect of increasing that amount; and
(b) housing benefit shall cease to be payable in respect of those charges as from the beginning of the period for which the first payment of the revised amount of benefit was made.

(4) Housing benefit shall not be payable in respect of any validated charges for any period falling after—

(a) 5th April 1998 where the rent is payable at intervals of a whole number of weeks; and
(b) 31st March 1998 in any other case.

(5) In this section—

the dwelling", in relation to a housing benefit determination, means the dwelling in respect of which the determination was made;
housing benefit determination" means a determination under section 130 of the Contributions and Benefits Act or the corresponding provisions of the Social Security Act 1986, or a decision on a review of such a determination;
medical care" includes treatment or counselling related to mental disorder, mental handicap, physical disablement or past or present alcohol or drug dependence;
personal care" includes assistance at meal-times or with personal appearance or hygiene;
validated charges" means charges in respect of which housing benefit is payable only by virtue of subsection (1) above.

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: With this, it will be convenient to take Lords amendment No. 91. I should inform the House that the amendment involves privilege.

Mr. Bradley: Amendments Nos. 76 and 91 propose to legitimise, from the date of Royal Assent, payments of housing benefit that have incorrectly met charges for personal general counselling and support or "personal care".
As Baroness Hollis explained in the other place, the measure has a long history. We inherited a situation whereby many thousands of vulnerable people had come to rely on housing benefit, which is generally intended


to meet only accommodation-related support services that relate to the "bricks and mortar" of a dwelling, to fund the support services needed to keep them in the community. The previous Secretary of State had commissioned an interdepartmental review to consider the long-term funding of that sector.
The trigger for the amendments was a divisional court judgment in July last year to the effect that only service charges that relate to the fabric of a dwelling are generally eligible for housing benefit. Evidence suggested, however, that most local authorities may have been meeting a wider range of service charges for personal support from housing benefit than was originally intended.
The ruling meant that there was a danger of a potential crisis in community care. The Secretary of State therefore immediately announced interim measures legitimising the vast majority of such payments in order to provide stability for tenants and landlords in "existing supported accommodation" pending the implementation of a sustainable long-term funding regime that could protect and maintain that important component of community care.
The measures consisted of interim regulations that took effect from 18 August 1997, which enable all reasonable charges for general counselling and support in "existing supported accommodation" to be met from housing benefit, and a compensation scheme to enable authorities to compensate providers that had lost income because housing benefit was no longer meeting charges for "personal care".
The new clause is designed to provide stability for local authorities that have previously met a wider range of support charges from housing benefit than was originally intended, by similarly legitimising such payments as having been properly made.
I must stress that we did not reach that decision lightly. In proposing to legitimise such payments, however, we have given due weight to the fact that they have enabled, and presently continue to enable, many thousands of vulnerable people to live independently in the community.
Most such payments will be for personal general counselling and support, which will be eligible under the interim regulations from 18 August 1997. We therefore propose to validate such payments up to that date. Remaining payments not eligible under the interim regulations, which will mainly be those where housing benefit has previously met ineligible charges for "personal care" in "existing supported accommodation", which are eligible for help under the compensation scheme, will be validated until either the benefit payable in respect of the charges is reviewed and revised following the introduction of the interim regulations on 18 August 1997, or up to the final cut-off date of 31 March/5 April this year, whichever falls first.
I commend the amendments to the House.

Mr. Peter Bottomley: I shall not necessarily expect the Minister to answer in detail the points that I make now, because I suspect that what he has just said has gone over the heads of most Members in the Chamber. None the less, I want to declare an interest in supporting groups, including those known as Emmaus, that provide accommodation for people who are moving

from being on income support to not being on income support but not being taxpayers either, and who find a community that answers three questions in one place—in effect, a secular monastery.
That is a place where people can find a roof, worthwhile activity and people who will accept them as they are. Not all succeed, but many will. I hope that in time—perhaps not by the millennium but shortly afterwards—there will be about 100 projects throughout the country assisting people who are not teenagers looking for work, whom the welfare-to-work programme may help, but who may have had difficulties such as psychiatric illness or alcoholism. Some may have been criminals; some may still be criminals.
Those are people on the margins of society who are looking for the opportunity to get their lives back together and a degree of confidence. The housing benefit system has properly been used to provide the kind of support that allows them to get out of the benefit trap and regain some degree of confidence; it may enable many of them to get back into the communities where they will be welcomed. I do not ask the Minister to reply tonight, but I hope that those who examine our comments will try to ensure that both the foyer and Emmaus-type projects will be given the allowances and the room that they need. We should not have to tell vulnerable people to go to one place for a day centre, another for a hostel and a third for the chance of finding worthwhile activity and a community that will accept them as they are. I am sure that that matter is related in some way to the Lords amendment, and I am pleased to commend it to the House.

Mr. Keith Bradley: The purpose of the amendment is to legitimise the previous payments that the divisional court ruling made illegal. We are also seeking future long-term funding and a robust arrangement for the type of support that the hon. Gentleman has identified. I assure him that we shall consider that position in the long-term review that is under way in order to ensure that there is stability in supported housing in this country.

Lords amendment agreed to [Special Entry].

Clause 70

POWER TO REDUCE CHILD BENEFIT FOR LONE PARENTS

Lords amendment: No. 77, in page 47, line 15, leave out from
("parent") to end of line 17

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: I inform the House that this amendment involves privilege.

Mr. Bradley: Amendment No. 77 will remove the Government's option of reducing the higher rate of child benefit for lone parents without abolishing it. The Government intend to use the power in clause 72 to remove the differential in child benefit rates for the first child of lone parents and couples from 6 July. Our intention is to align child benefit rates for all families, while protecting lone parents who are already receiving the higher rates.
The drafting of the clause has been causing concern that it might allow the Government to reduce child benefit rates for lone parents to below the rate paid to two-parent families. We have always made it clear that, in our view, the provision does not allow us to do that, and I believe that this amendment will alleviate any lingering concerns once and for all. The amendment should remove any doubt; clause 72 will allow the Government to align only the rates for couples and lone parents. I commend the amendment to the House.

Mr. Peter Bottomley: I have a very different point that can be made in virtually one sentence. In supporting the Government's proposal, I commend to the Minister the idea of reviewing the name child benefit and replacing it with the expression "child cash allowance". The problem with the term child benefit is that it suggests that it is an income support measure for those on the lowest incomes when, in practice, that group cannot receive it—neither one nor two-parent families. I believe that a change in the name would be a great advantage in discussions in the House and between the Chief Secretary and Departments.

Lords amendment agreed to [Special Entry].

Clause 72

RESTRICTIONS ON BACKDATING OF BENEFIT

Lords amendment: No. 78, to leave out clause 72

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker: I inform the House that this amendment involves privilege.

Mr. Bradley: Amendment No. 78 removes from the Bill clause 72, which was to align at one month the time limits for backdating claims for benefits. One of the key priorities set out in the welfare reform Green Paper, which was presented by my right hon. Friend the Minister for Welfare Reform—whom I am pleased to see on the Front Bench tonight—is to ensure that the delivery of social security is flexible, efficient and easy to use. We were not satisfied either that people who are entitled to benefits are given sufficient advice and encouragement to claim them, or that people who should not receive benefits are prevented from doing so. Therefore, as a responsible Government, we decided that, until further progress has been made on issues relating to the claiming of benefit, it would not be sensible to implement the original proposal, and that we would continue our work on the claiming process.
In Committee, I gave a number of examples of benefit claims that could be more successfully worked together, including the registration of birth and child benefit claims, and the registration of death and death benefit claims. We shall continue to work on that, taking account, for example, of the pilot projects that I announced today in a written answer, and examining why some of the poorest pensioners do not always claim the income support to which they are entitled. If necessary, we shall return to the issue. I commend the amendment to the House.

Mr. Burns: I do not understand how the Minister kept a straight face while delivering that speech. The Lords amendment gives me the greatest pleasure. The House always likes a sinner who repents, and I am delighted that the Minister has repented.

The Minister for Welfare Reform (Mr. Frank Field): Where is the repentance?

Mr. Burns: The right hon. Gentleman asks where the repentance is; he will now find out.
Until the changes were made in the House of Lords, as a result of the Budget, this Bill, which we have been considering over the past few months, could have been known as the Peter Lilley memorial Bill—with the exception of one clause, it was more or less a leftover from the Conservative Government. The one clause that the Labour Government inserted was a draconian measure to reduce the amount of time in which individuals could backdate benefit claims.
We discussed the clause at great length in Committee, where the Minister, with an equally straight face, defended to the hilt the Government's proposals to make it more difficult for people to backdate their benefit claims. The period was to be reduced from three months to one month—in the case of housing and council tax benefits, the period was to be reduced from 12 months. When the Minister got into difficulties, he came out with a string of exceptions, to which we listened with great interest. He was emphatic that the Government would pursue their course and impose the draconian measure.
Conservative Members objected to the proposal and fought it tooth and nail, but the Government would not listen. Tonight, the Minister has climbed down and accepted the Opposition's arguments. The £58 million that the Treasury would have saved—£42 million of which would be saved from the budget on pensioners, the disabled, the long-term sick and the most vulnerable in society—has been abandoned.

Mr. Field: Do the Conservatives support the amendment?

Mr. Burns: The right hon. Gentleman asks whether we support the amendment. Of course we support it—a blind man could see that we do.
In the spirit of generosity, I thank the Minister for having the courage not to be too proud, but to accept that the Government's proposals were wrong and that we were right.

Mr. Andrew Dismore: I welcome the amendment.

Mr. Burns: The hon. Gentleman did not welcome it in Committee.

Mr. Dismore: I raised the issue in Committee, as the hon. Gentleman knows. I also raised it on Report in the context of the industrial injuries scheme, with particular reference to industrial disablement benefit. I should tell Conservative Members that, on Report, my hon. Friend the Minister said that he was sympathetic to what I was


saying and that he would consider imaginatively the points that I raised. I am pleased that we are now taking time to reconsider those issues.

Mr. Burns: Will the hon. Gentleman give way?

Mr. Dismore: No, there is not time.
I am glad that the Minister will reconsider backdating, especially in the context of the available information on benefits and of the need to encourage claimants to come forward. Backdating will still be needed in some cases.
Examples of such cases would include diseases with a long incubation period and some progressive industrial diseases that would not allow a clear line to be drawn on where someone would qualify for the benefits: asbestos-related diseases, asthma, repetitive strain injury and many of the industrial cancers. I am grateful for the Lords amendment.

Mr. Rendel: The Government will be pleased but not surprised that the Liberal Democrats support the Lords amendment. We, too, are delighted that they have so completely changed course from everything that they said in Committee and on Report. This is the single most important welfare change in the Lords amendments. It is a great pity that the Government did not have the sense to agree to similar amendments that were tabled in Committee.
This year, there have been four attempts to cut benefits: the cut for lone parents was, sadly, not reversed, although some concessions have been made on child benefit; council tax benefits were mostly reversed, and there is absolutely no reason not to reverse the rest; jobseeker's allowance cuts were completely reversed before they were even presented to the House; and now backdating is to be completely reversed.
All those changes are good news, but there are rumours—and, from what the Minister said, they may be true—that there is still a chance that the reversal of the benefit cuts will be reversed in the summer as a result of the overall spending review. That would be very foolish, considering the weight of opposition that has been mounted. I hope that the Government will have the sense not to try the patience not only of the House but of the people of this country, among whom there is a huge majority against the cuts.

Mr. Keith Bradley: We are reviewing the whole social security system through the Green Paper on welfare reform. As we introduce our new modern service and ensure that the claiming process is streamlined and made more efficient, we can more effectively consider how backdating rules affect claimants. In that context, I can assure my hon. Friend the Member for Hendon (Mr. Dismore) that the matters that he brought to the attention of the House will be examined again. I commend the Lords amendment to the House.

Lords amendment agreed to [Special Entry].

Lords amendments Nos. 79 and 80 agreed to.

New clause

Lords amendment: No. 81, before clause 75, to insert the following new clause—Pilot schemes—

".—(1) Any regulations to which this subsection applies may be made so as to have effect for a specified period not exceeding 12 months.
(2) Any regulations which, by virtue of subsection (1) above, are to have effect for a limited period are referred to in this section as "a pilot scheme".
(3) A pilot scheme may provide that its provisions are to apply only in relation to—

(a) one or more specified areas or localities;
(b) one or more specified classes of person;
(c) persons selected—

(i) by reference to prescribed criteria; or
(ii) on a sampling basis.

(4) A pilot scheme may make consequential or transitional provision with respect to the cessation of the scheme on the expiry of the specified period.
(5) A pilot scheme ("the previous scheme") may be replaced by a further pilot scheme making the same, or similar, provision (apart from the specified period) to that made by the previous scheme.
(6) In so far as a pilot scheme would, apart from this subsection, have the effect of—

(a) treating as capable of work any person who would not otherwise be so treated; or
(b) reducing the total amount of benefit that would otherwise be payable to any person,

it shall not apply in relation to that person.
(7) Subsection (1) above applies to—

(a) regulations made under section 171D of the Contributions and Benefits Act (incapacity for work: persons treated as incapable of work); and
(b) in so far as they are consequential on or supplementary to any such regulations, regulations made under any of the provisions mentioned in subsection (8) below.

(8) The provisions are—

(a) subsection (5)(a) of section 22 of the Contributions and Benefits Act (earnings factors);
(b) section 30C of that Act (incapacity benefit);
(c) sections 68 and 69 of that Act (severe disablement allowance);
(d) subsection (1)(e) of section 124 of that Act (income support) and, so far as relating to income support, subsection (1) of section 135 of that Act (the applicable amount);
(e) Part XIIA of that Act (incapacity for work);
(f) section 61A of the Administration Act and section 31 above (incapacity for work).

(9) A statutory instrument containing (whether alone or with other provisions) a pilot scheme shall not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House of Parliament."

Mr. Keith Bradley: I beg to move, That this House doth agree with the Lords in the said amendment.
The amendment deals with the circumstances in which a person claiming an incapacity benefit is to be treated as capable or incapable of work. It introduces a new regulation-making power to allow pilot schemes to be set up. The schemes will allow us to test the effect of less restrictive definitions of incapacity in order to improve opportunities for disabled people, and to test different measures to determine the most effective ways of helping those sick and disabled people who want to move towards the world of work so to do.
This is an entirely benevolent power. It will allow benefits to be extended to those who might otherwise be excluded, but it will not allow for the removal or reduction of benefit for those currently entitled.
That important safeguard will ensure that the power can be used only in a benign manner. It will enable us to test the effects of allowing people to undertake work trials, or to try a small amount of work as preparation for a return to the labour market. It will also allow us to assess the value of enabling those who will never be able to sustain regular full-time employment nevertheless to participate in the world of work.
I commend the amendment to the House.

Mr. Peter Bottomley: I welcome the amendment. It is not only benign but very important for a significant number of people who may suffer from alcoholism or a psychiatric illness—it is more likely to be psychiatric than physical—and who may be able to work for three weeks out of four, or three months out of four, but who are likely and predictably to have collapses, which make them unable to continue in paid employment.
Any Member of Parliament with a mental health project in his or her constituency, who has heard from someone who has moved from income support to being a taxpayer, will know the difference that such a provision would make to that person's life. If re-entry to the benefit system becomes difficult, people will not take the risk.
I commend the Government's proposal and hope that it works well.
Lords amendment agreed to.

New clause

Lords amendment: No. 82, before clause 75, to insert the following new clause—Expenditure for facilitating transfer of functions etc.—

".—(1) The Secretary of State and the Commissioners of Inland Revenue may incur expenditure in doing anything which in his or their opinion is appropriate for the purpose of facilitating either of the following things, namely—

(a) the transfer to the Commissioners of such of the functions of the Secretary of State as are exercisable by the Contributions Agency; and
(b) the exercise by the Commissioners of those functions.

(2) The powers conferred by subsection (1) above—

(a) shall be exercisable whether or not Parliament has given any approval on which either of the things there mentioned depends; and
(b) shall be without prejudice to any power conferred otherwise than by virtue of that subsection.

(3) Any expenditure incurred under this section shall be defrayed out of money provided by Parliament.
(4) In its application to Northern Ireland, this section shall have effect with the following modifications, namely—

(a) for the first reference to the Secretary of State there shall be substituted a reference to the Department of Health and Social Services for Northern Ireland;
(b) for the reference to such of the functions of the Secretary of State as are exercisable by the Contributions Agency there shall be substituted a reference to such of the functions of that Department as correspond to those functions; and

(c) for the reference to money provided by Parliament there shall be substituted a reference to money appropriated by Measure of the Northern Ireland Assembly."

Mr. Denham: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael Lord): With this, it will be convenient to take Lords amendment No. 96.
I inform the House that the amendment involves privilege.

Mr. Denham: The Government brought forward in another place amendments to give effect to the national insurance reforms announced in the Budget, and we have debated those separately. For one of the reforms—the transfer of the Contributions Agency to the Inland Revenue from April 1999—the Government need additional powers. They are designed to allow the Government to incur necessary preparatory expenditure in advance of the enactment of the substantive legislation that would effect the transfer. That is the purpose of amendments Nos. 82 and 96.
The transfer of the Contributions Agency to the Inland Revenue represents a major streamlining of the system, which will benefit employers and individual contributors alike. We want to ensure that the transfer takes place as quickly and smoothly as possible. We plan to bring forward appropriate legislation to transfer operational functions to the Inland Revenue in due course. However, finalising the details in time for a new Bill to be introduced in this Session has not proved possible.
Providing continuity of service to contributors and employers in moving to the new merged organisation is vital. There is much to be done to achieve that: we must change computer systems; forms and leaflets must be redesigned; and employers need to be kept informed. We need to start making operational preparations in good time so that, in the event of legislation being enacted to effect the changes, there is no risk of disruption of service in April 1999. That is prudent management designed to ensure that the transfer meets its central aim—improving service to employers and contributors alike.
Amendment No. 82 and the consequential amendment linked to it, No. 96, are designed to ensure that there is no doubt about the propriety of spending the right amount at the right time to make the necessary preparations for the transfer. They provide an essential step towards a smooth and speedy shift of responsibilities, and I commend them to the House.

Mr. Waterson: The aim of the provision is clear, and I am grateful to the Minister for explaining it. However, it is extraordinary that we are debating the proposal for the very first time so late at night; the matter was first raised in another place. Everyone agrees that it is important.
As the Minister said in his recent letter setting out his intentions, which was much appreciated, the provision would enable preparatory expenditure in advance of the substantive legislation. He said:
It will help the two Departments to share experience, knowledge and skills in combating avoidance and will make better use of resources.


The Government decided to introduce the paving power in this Bill
as it was the earliest suitable legislative vehicle.
Conservative Members dispute that. It should have been dealt with in the usual and, we would say, the proper way, not tacked on to the end of a substantial Bill that has already been in Committee.
The policy is hopelessly muddled—which is all too typical of the Government, whether in social security or in other spheres of government—and no substitute for meaningful and radical welfare reform. That view was expressed in the other place, where Baroness Hollis talked of "streamlining". The Minister also used that word and, as was said in the Lords, we heard that substantive legislation would be tabled "in due course". He told us when that would not happen—that is, during this Session—but I press him a little more on when the legislation will be ready. Will he produce a draft Bill for comment and consultation?
10.45 pm
There was considerable debate in the Lords about what the proposals mean. The transfer of authority would constitute a clear breach of the contributory principle. That is our main objection. It would not only go against everything that the Minister for Welfare Reform has ever said about welfare reform, but would clearly contradict the Government's attempt to restore the contributory principle through their stakeholder pension plans. On 21 December 1997, The Sunday Telegraph reported a remark on that subject:
I do not believe that the contributory principle should be set aside, and certainly not without the most careful thought and full discussion.
I entirely associate myself and my hon. Friends with the words of the Secretary of State for Education and Employment.
Our view is that the proposals put the cart before the horse. They make no sense; we need thoroughgoing proposals for welfare reform. The March 1998 Green Paper on the subject stated that
changes to the National Insurance scheme provide an opportunity to update the contributory principle. We will examine the link between paying contributions and earning entitlements to benefits with a view both to simplifying further administration of the scheme for employers and emphasising the link between work and earning benefit entitlement.
How do the Government square their decision to merge the Contributions Agency and the Inland Revenue with the commitment to update the contributory principle? The proposed merger appears to be a first step in a more far-reaching programme of tax and benefits integration, although the word "integration" did not find favour with Baroness Hollis, who preferred to talk about "alignment", whatever that may mean. It is another spin doctor-manufactured word.
A number of problems are involved with merging taxes and benefits, none of which has been satisfactorily addressed by the Government so far. First, whereas assessment for taxes is based on individual income, assessment of eligibility for benefits is usually based on the family unit. The Government are already in a mess of

their own making over their attempt to square that circle in the working families tax credit package. Secondly, there is the problem of the period of assessment. Taxes are assessed annually, but benefits are based on short-term need. The assessment of a benefit claim, therefore, is logically based on a much shorter period.
The Government's stakeholder pension proposals are said to be aimed at strengthening the contributory principle and bringing people on low or irregular pay into the system. That policy objective will be undermined by the decision to push for further integration of tax and benefits. It is perfectly clear, as it has been for the past year or more, that the Government cannot agree among themselves on a single course for their welfare reform project, which is one of their flagship policies.
It is a fiction to suggest that national insurance contributions are not a tax in every sense of the word. We have heard about the definition, or lack thereof, of the word "alignment", which was used in the other place. What savings does the Minister envisage resulting from the policy? It was stated in the other place that the estimate of 200 jobs saved should be a gross underestimate. It is clear to the Opposition that there are a considerable number of problems with the policy, which have not been thought through by the Government. They are putting the cart before the horse. It would be unwise for the Government to proceed with this further integration of tax and benefits unless those problems have been properly addressed. In those circumstances, we cannot support the amendment and we shall press it to a vote.

Mr. Peter Bottomley: I agree strongly with my hon. Friend the Member for Eastbourne (Mr. Waterson). In another place, my predecessor Lord Higgins made the point that this matter ought to have formed a separate Bill, or should have been included in a Finance Bill.
Anyone who has actually considered the new clause will notice that subsection (4) is uncontroversial, in that it applies to Northern Ireland that which would otherwise apply to the rest of the United Kingdom. Subsection (3) states:
Any expenditure incurred under this section shall be defrayed out of money provided by Parliament",
which is fairly normal. However, when one reaches subsections (1) and (2), one finds that, if not quite Henry VIII, they are at least Henry VII, if I can put it that way. They basically say that, whatever other provision Parliament makes, the Government can spend money on what they want in respect of this matter.
There are particular issues relating to the amalgamation of national insurance contributions and taxation, whether from the point of view of the employer or the employee, employment or unemployment, or of better administration. Those issues deserve more than a 20-minute debate on the Floor of the House of Commons after 10 o'clock at night. The Government, backed up by their vast serried ranks of Members who were not here for the debate, may be able to force the new clause through, but they ought to feel ashamed of the way in which they have abused their position in Parliament. I hope that the people will notice what they have done tonight.

Mr. Denham: I explained earlier the importance of enabling the preparatory work to take place, so that the


transfer could take place smoothly and effectively next April. I believe that the Bill, concerned as it is with both national insurance matters and our proposals to simplify and streamline the benefits system, is an entirely appropriate way in which to bring those matters before the House and ensure that the preparatory work can be done. Of course, further legislation will be required to effect the transfer and, at that stage, there will be appropriate and full scrutiny of the detail of our proposals. I do not believe that there is an issue on that score.
The hon. Member for Eastbourne (Mr. Waterson) said that there is no sense at all in the proposal, unless we get rid of the contributory principle, but we disagree. We believe that bringing the two organisations together so that employers have to work with only one organisation will be simpler for business, albeit that at the point of merger and beyond there will be two systems—a tax system and a national insurance system with their different requirements. It will be easier for employers to work with one organisation, and the change will give us an opportunity to streamline our operations and simplify our procedures. That is worth doing, irrespective of any future reforms.
The hon. Gentleman rightly quoted the words of the welfare reform Green Paper, that there are opportunities to modernise and update the contributory principle, to simplify it for employers and to strengthen the link between work and earning entitlements to benefits. We shall take that work forward, but I disagree that there is no point in proceeding on the basis of the current system.
The hon. Gentleman asked about savings. The main purpose of the change is to simplify matters by combining the activities of the two bodies. As we have said publicly, we expect some 200 jobs to be saved after April, from a combined work force of 60,000.
We want to provide a better service for employers. The Government's proposal has been welcomed throughout the business community, and I think that businesses will be astounded to discover that the official Opposition have tried to block it by taking an anti-business, anti-employer stance.
Question put, That this House doth agree with the Lords in the said amendment:—

The House divided: Ayes 257, Noes 119.

Division No. 275]
[10.55 pm


AYES


Ainger, Nick
Brown, Rt Hon Nick (Newcastle E)


Alexander, Douglas
Browne, Desmond


Allan, Richard
Buck, Ms Karen


Anderson, Janet (Rossendale)
Burden, Richard


Ashton, Joe
Burgon, Colin


Atkins, Charlotte
Burnett, John


Barnes, Harry
Campbell, Alan (Tynemouth)


Barron, Kevin
Campbell, Mrs Anne (C'bridge)


Battle, John
Campbell, Menzies (NE Fife)


Begg, Miss Anne
Campbell-Savours, Dale


Benn, Rt Hon Tony
Canavan, Dennis


Benton, Joe
Caplin, Ivor


Berry, Roger
Casale, Roger


Best, Harold
Chapman, Ben (Wirral S)


Betts, Clive
Chaytor, David


Blears, Ms Hazel
Chisholm, Malcolm


Blizzard, Bob
Church, Ms Judith


Borrow, David
Clapham, Michael


Bradley, Keith (Withington)
Clark, Paul (Gillingham)


Bradshaw, Ben
Clarke, Charles (Norwich S)





Clelland, David
Hughes, Simon (Southwark N)


Clwyd, Ann
Hurst, Alan


Coaker, Vernon
Hutton, John


Coffey, Ms Ann
Illsley, Eric


Cohen, Harry
Jackson, Helen (Hillsborough)


Coleman, Iain
Jamieson, David


Colman, Tony
Jenkins, Brian


Cook, Frank (Stockton N)
Johnson, Alan (Hull W & Hessle)


Cooper, Yvette
Jones, Barry (Alyn & Deeside)


Cotter, Brian
Jones, Ms Jenny (Wolverh'ton SW)


Cousins, Jim



Crausby, David
Jones, Dr Lynne (Selly Oak)


Cryer, Mrs Ann (Keighley)
Keeble, Ms Sally


Cryer, John (Hornchurch)
Keen, Alan (Feltham & Heston)


Cummings, John
Kennedy, Charles (Ross Skye)


Cunningham, Rt Hon Dr John (Copeland)
Kidney, David



King, Andy (Rugby & Kenilworth)


Cunningham, Jim (Cov'try S)
King, Ms Oona (Bethnal Green)


Dalyell, Tam
Kingham, Ms Tess


Darvill, Keith
Kirkwood, Archy


Davey, Edward (Kingston)
Ladyman, Dr Stephen


Davey, Valerie (Bristol W)
Laxton, Bob


Davies, Rt Hon Denzil (Llanelli)
Leslie, Christopher


Davies, Geraint (Croydon C)
Levitt, Tom


Davies, Rt Hon Ron (Caerphilly)
Lewis, Terry (Worsley)


Dean, Mrs Janet
Linton, Martin


Denham, John
Livingstone, Ken


Dismore, Andrew
Llwyd, Elfyn


Dobbin, Jim
Lock, David


Doran, Frank
Love, Andrew


Dowd, Jim
McAvoy, Thomas


Eagle, Maria (L'pool Garston)
McCabe, Steve


Ellman, Mrs Louise
McCafferty, Ms Chris


Ennis, Jeff
McCartney, Ian (Makerfield)


Etherington, Bill
McDonnell, John


Field, Rt Hon Frank
McIsaac, Shona


Fitzpatrick, Jim
Mackinlay, Andrew


Fitzsimons, Lorna
McNamara, Kevin


Flint, Caroline
McNulty, Tony


Flynn, Paul
MacShane, Denis


Foster, Michael J (Worcester)
Mactaggart, Fiona


Galloway, George
McWalter, Tony


Gapes, Mike
McWilliam, John


Gardiner, Barry
Mahon, Mrs Alice


George, Andrew (St Ives)
Mallaber, Judy


George, Bruce (Walsall S)
Marshall, David (Shettleston)


Gerrard, Neil
Marshall, Jim (Leicester S)


Gibson, Dr Ian
Martlew, Eric


Gilroy, Mrs Linda
Meale, Alan


Godman, Dr Norman A
Merron, Gillian


Goggins, Paul
Michael, Alun


Golding, Mrs Llin
Michie, Bill (Shef'ld Heeley)


Gordon, Mrs Eileen
Milburn, Alan


Gorrie, Donald
Miller, Andrew


Griffiths, Jane (Reading E)
Mitchell, Austin


Grogan, John
Moonie, Dr Lewis


Hall, Mike (Weaver Vale)
Moran, Ms Margaret


Hall, Patrick (Bedford)
Morgan, Alasdair (Galloway)


Hamilton, Fabian (Leeds NE)
Morgan, Ms Julie (Cardiff N)


Hanson, David
Morley, Elliot


Harman, Rt Hon Ms Harriet
Mudie, George


Heal, Mrs Sylvia
Mullin, Chris


Healey, John
Murphy, Denis (Wansbeck)


Heath, David (Somerton & Frome)
Murphy, Jim (Eastwood)


Henderson, Ivan (Harwich)
Norris, Dan


Hepburn, Stephen
Oaten, Mark


Heppell, John
O'Brien, Mike (N Warks)


Hesford, Stephen
O'Neill, Martin


Hill, Keith
Organ, Mrs Diana


Hodge, Ms Margaret
Palmer, Dr Nick


Hoey, Kate
Pearson, Ian


Hope, Phil
Pendry, Tom


Hopkins, Kelvin
Perham, Ms Linda


Hoyle, Lindsay
Pickthall, Colin


Hughes, Ms Beverley (Stretford)
Pike, Peter L


Hughes, Kevin (Doncaster N)
Pond, Chris






Pope, Greg
Stinchcombe, Paul


Pound, Stephen
Stringer, Graham


Prentice, Ms Bridget (Lewisham E)
Stuart, Ms Gisela


Prentice, Gordon (Pendle)
Sutcliffe, Gerry


Prescott, Rt Hon John
Swinney, John


Prosser, Gwyn
Taylor, Rt Hon Mrs Ann (Dewsbury)


Purchase, Ken



Radice, Giles
Taylor, David (NW Leics)


Rammell, Bill
Thomas, Gareth R (Harrow W)


Rapson, Syd
Timms, Stephen


Reed, Andrew (Loughborough)
Tipping, Paddy


Rendel, David
Todd, Mark


Robertson, Rt Hon George (Hamilton S)
Touhig, Don



Truswell, Paul


Roche, Mrs Barbara
Turner, Dr George (NW Norfolk)


Rooker, Jeff
Twigg, Derek (Halton)


Rooney, Terry
Twigg, Stephen (Enfield)


Rowlands, Ted
Vaz, Keith


Roy, Frank
Vis, Dr Rudi


Ruane, Chris
Wallace, James


Sanders, Adrian
Ward, Ms Claire


Sawford, Phil
Wareing, Robert N


Sheerman, Barry
Watts, David



Whitehead, Dr Alan


Simpson, Alan (Nottingham S)
Williams, Alan W (E Carmarthen)


Singh, Marsha
Willis, Phil


Skinner, Dennis
Winnick, David


Smith, Rt Hon Andrew (Oxford E)
Winterton, Ms Rosie (Doncaster C)


Smith, Angela (Basildon)
Wood, Mike


Smith, John (Glamorgan)
Woolas, Phil.


Smith, Sir Robert (W Ab'd'ns)
Worthington, Tony


Snape, Peter
Wright, Anthony D (Gt Yarmouth)


Soley, Clive
Wright, Dr Tony (Cannock)


Spellar, John



Starkey, Dr Phyllis
Tellers for the Ayes:


Stewart, David (Inverness E)
Jane Kennedy and


Stewart, Ian (Eccles)
Mr. Robert Ainsworth.


NOES


Ainsworth, Peter (E Surrey)
Fowler, Rt Hon Sir Norman


Amess, David
Fox, Dr Liam


Ancram, Rt Hon Michael
Fraser, Christopher


Arbuthnot, James
Garnier, Edward


Atkinson, Peter (Hexham)
Gibb, Nick


Beggs, Roy
Gillan, Mrs Cheryl


Bercow, John
Gorman, Mrs Teresa


Blunt, Crispin
Gray, James


Boswell, Tim
Green, Damian


Bottomley, Peter (Worthing W)
Greenway, John


Brady, Graham
Grieve, Dominic


Brazier, Julian
Hamilton, Rt Hon Sir Archie


Browning, Mrs Angela
Hammond, Philip


Bruce, Ian (S Dorset)
Hawkins, Nick


Burns, Simon
Hayes, John


Butterfill, John
Heathcoat-Amory, Rt Hon David


Chapman, Sir Sydney (Chipping Barnet)
Horam, John



Howard, Rt Hon Michael


Chope, Christopher
Howarth, Gerald (Aldershot)


Clappison, James
Hunter, Andrew


Clark, Rt Hon Alan (Kensington)
Jack, Rt Hon Michael


Clarke, Rt Hon Kenneth (Rushcliffe)
Jackson, Robert (Wantage)



Johnson Smith, Rt Hon Sir Geoffrey


Clifton-Brown, Geoffrey



Collins, Tim
King, Rt Hon Tom (Bridgwater)


Davies, Quentin (Grantham)
Kirkbride, Miss Julie


Davis, Rt Hon David (Haltemprice)
Laing, Mrs Eleanor


Day, Stephen
Lait, Mrs Jacqui


Dorrell, Rt Hon Stephen
Leigh, Edward


Duncan, Alan
Letwin, Oliver


Duncan Smith, Iain
Lewis, Dr Julian (New Forest E)


Emery, Rt Hon Sir Peter
Lidington, David


Evans, Nigel
Lilley, Rt Hon Peter


Fabricant, Michael
Loughton, Tim


Fallon, Michael
Luff, Peter


Flight, Howard
Lyell, Rt Hon Sir Nicholas


Forth, Rt Hon Eric
MacGregor, Rt Hon John





MacKay, Andrew
Spring, Richard


Maclean, Rt Hon David
Stanley, Rt Hon Sir John


McLoughlin, Patrick
Steen, Anthony


Madel, Sir David
Streeter, Gary


Malins, Humfrey
Swayne, Desmond


Maude, Rt Hon Francis
Syms, Robert


Mawhinney, Rt Hon Sir Brian
Tapsell, Sir Peter


May, Mrs Theresa
Taylor, Ian (Esher & Walton)


Moss, Malcolm
Taylor, John M (Solihull)


Nicholls, Patrick
Thompson, William


Norman, Archie
Tredinnick, David


Ottaway, Richard
Trend, Michael


Page, Richard
Tyrie, Andrew


Paice, James
Wardle, Charles


Paterson, Owen
Waterson, Nigel


Pickles, Eric
Wells, Bowen


Prior, David
Whitney, Sir Raymond


Randall, John
Widdecombe, Rt Hon Miss Ann


Robathan, Andrew
Wilkinson, John


Robertson, Laurence (Tewk'b'ry)
Willetts, David


Ruffley, David
Woodward, Shaun


St Aubyn, Nick
Young, Rt Hon Sir George


Simpson, Keith (Mid-Norfolk)



Soames, Nicholas
Tellers for the Noes:


Spelman, Mrs Caroline
Mr. James Cran and


Spicer, Sir Michael
Mr. Oliver Heald.

Question accordingly agreed to.
Lords amendment agreed to [Special Entry].
Lords amendments Nos. 83 to 165 agreed to.
Lords amendment No. 166 and Government amendment (a) thereto agreed to [Special Entry].
Lords amendments Nos. 167 to 184 agreed to.

PETITION

Duty-free Sales

Mr. Gwyn Prosser: I wish to present a petition signed by more than 6,000 citizens of the United Kingdom, many of whom are resident in my constituency.
The petition has been signed by staff employed on Dover's successful ferry fleet and by passengers travelling with the new joint venture company P and O-Stena Line. The petitioners believe that if duty-free sales are abolished in June 1999, there will be a severe impact on jobs in Dover, in other parts of the UK and throughout the European Union. They request that an impact study be conducted before decisions to abolish duty free are ratified.
The petition concludes:
The petitioners therefore request that the House of Commons calls on the UK Government to support a review of the decision to abolish intra-Community duty and tax-free sales … beyond June 1999, until a full and proper independent study is undertaken into the consequences of the decision.
I fully support the petition.
To lie upon the Table.

Oil and Gas Platforms

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]

Mr. Anthony D. Wright: When Greenpeace and other environmental groups successfully mobilised public opinion against the deep water disposal of the Brent Spar offshore platform, they presented the oil and gas industry with a major costly dilemma—a situation which is likely to recur if recent press reports are to be believed. Brent Spar is a massive floating storage buoy, with six floating storage tanks holding up to 50,000 metric tonnes of oil. It comprises 7,000 metric tonnes of concrete and 7,500 metric tonnes of steel. At 137 m in height, it dwarfs Big Ben's tower, which is a mere 95.7 m. When it was taken out of operation, the tanks were drained of oil and sea water was pumped in, leaving a residue of oily sludge that could not be pumped into the ocean. This sludge contains various contaminants, including hydrocarbons, polychlorinated biphenyls and various heavy metals
On the basis of cost and safety, deep-sea disposal was the preferred option for the Brent Spar. Although this decision was approved by the Department of Trade and Industry on 20 December 1994, the balance of the environmental argument—in the public's mind at least—was strongly against that method of disposal. Shell—facing the threat of consumer boycotts and direct action in continental Europe—decided, at the eleventh hour, to seek to dispose of the structure on land, although both the company and the then UK Government believed that deep-sea disposal offered the best practicable environmental option.
The cost of on-land disposal of Brent Spar is likely to be about £23 million to £26 million. The disposal will also be very labour-intensive, involving complex and potentially hazardous operations. Risk analysis suggests that the probability of fatal injury in on-land disposal is six times greater than it is in deep-water disposal. It is also estimated that using even the cheaper, deep-water method to dispose of Brent Spar would have cost £17 million. With about 150 offshore platforms in the southern North sea alone, oil and gas companies, with the Government, face a costly and politically awkward time in decommissioning oil and gas platforms.
There is, however, a third way in which to deal with the problem: recommissioning, or reuse, of platforms. In this debate, I should like to deal with that third, more sustainable option.

Dr. Ian Gibson: Does my hon. Friend realise that reports in the press state that 60 more oil rigs are likely to be disposed of in the sea? Does he agree that that would be unacceptable, and that finding alternative methods of destroying or recommissioning oil rigs is important not only to the environmental lobby, but to the interests of the British people?

Mr. Wright: I certainly agree with my hon. Friend that that problem will have to be faced. However, the difficulty is one of cost. The system proposed by Versatruss could be used to deal with most of those North sea rigs. The Versatruss system will certainly be an option open to companies in dealing with their rigs.
Although the third option would not be appropriate in dealing with all offshore platforms, I firmly believe that recommissioning will make a valuable contribution to our economy and greatly benefit the environment. However, I should explain what recommissioning entails, and how the groundwork for the future of that innovative idea is being developed in my constituency of Great Yarmouth.
The objective of recommissioning is to extend the life of platforms by refitting and reuse, reducing the cost of decommissioning and thereby increasing the efficiency of oil and gas fields. Currently, an operator is more likely to deem a field to be uneconomic not when it is dry, but when the company believes that its pounds would be better spent elsewhere. "Economic" therefore has no common definition. However, when reassessed, fields that did not seem to be profitable can often be given a new lease of life, especially with the advent of new technologies enabling reuse of platforms.
The process is being developed by the industry under the generic name of "mature asset management". Recommissioning could mean that there is not a cost burden, but residual value at the end of the process, and that a liability thus becomes an asset.
Recommissioning could have a great impact on the industry. It is envisaged that operators may decide to move platforms from one field to another—by, for example, using the Versatruss removal method and recommissioning—as a part of planned asset
management.
Briefly, the Versatruss removal method involves the use of a catamaran-style technology, and has been used successfully to move platforms round the Gulf of Mexico. Versatruss is an American company that has made the wise decision of locating its United Kingdom operation in Great Yarmouth.
The body responsible for much of the innovative thinking on recommissioning is the Great Yarmouth Recommissioning Partnership, which was formed because of Yarmouth's failure to attract, in early 1996, the decommissioning of Shell's Leman BK platform. In response to that failure, in September 1996, the offshore sector of the Great Yarmouth chamber of commerce held a conference of local businesses to discuss the matter.
The conference, and subsequent workshops, consolidated the opinions and ideas of local businesses, and set out to establish how to redress Great Yarmouth's late start and initial failure in the decommissioning process. An action plan was formulated, and a steering forum—involving representatives of Amoco UK Exploration, UK Waste, AMEC Process and Energy, and Datadrum Marketing—was established. Members of the university of East Anglia's centre for environmental and risk management were co-opted on to the forum as independent experts.
On 12 June 1997, the steering group introduced the concept of Great Yarmouth as a centre of excellence for recommissioning and the energy industry, and the Great Yarmouth Recommissioning Partnership was born. That partnership offers solutions that are quicker, cheaper and safer than those of any of its competitors. The partnership's report, which goes by the title "Sustain the Flame", sums up the essence of the scheme as the four Rs: remove, recommission, reuse and recycle. It has become known as the Great Yarmouth solution.
The industry is beginning to agree that decommissioning alone is not the answer. Recommissioning and resale can give value to an asset, which, until the Great Yarmouth solution came along, had been considered a liability. With 150 structures in the southern North sea alone, the prize for Great Yarmouth could be multi-million pound contracts to carry out the recommissioning work, with all that that means for jobs in a town with a high level of unemployment. Furthermore, turning this innovative scheme into action would greatly boost Great Yarmouth's case for an outer harbour, even though the scheme is not dependent on its construction. In fact, it is even possible that a section of a decommissioned platform could form the basic structure of an outer harbour. That is another imaginative example of the reuse of offshore technology.
The viability of the scheme has been greatly enhanced by the recommendation the European Commission made in February this year, which states that oil and gas platforms should no longer be dumped at sea. The Commission goes on to say that
all except a small number of the 600 or so installations in European waters can be safely and economically removed and taken to land for recycling and safe disposal.
The Commission concludes that rules should, therefore, be based on the principle of prohibiting the disposal of platforms at sea. The European Council will be asked to confirm that that is the policy which the Commission should put forward on behalf of the European Union in talks at the all-important Ospar convention, which will shortly determine future policy in this sphere.
As I said, a significant number of offshore platforms are located in the southern North sea. That means that the port of Great Yarmouth is ideally situated to take on the specialised work involved in the recommissioning process. Indeed, EC waste legislation is driven by the proximity principle, which supports the use of the nearest appropriate facility. There are obvious reasons why that principle is important in this particular application, as hon. Members with sea-going experience or knowledge of the North sea will understand. Movement of these relatively large structures requires good weather conditions, and, to limit the risk to life and limb from rough seas and high winds, it is important that the minimum time is spent in relocation.
Of course, the long-term use of non-renewable fossil fuels is not necessarily secure, as it does not solve the problem of climate change, which is of great concern to a seaside town such as Great Yarmouth. However, the recommissioning example in Great Yarmouth demonstrates that the oil and gas industry, academics and the Government can come together to form successful partnerships capable of producing imaginative solutions to pressing environmental problems. There is no reason why such partnerships should not be able to provide similar solutions to long-term environmental concerns such as global warming. In Great Yarmouth, there is just such an initiative to develop a centre of excellence for the energy industry, which would build on the success of the Great Yarmouth Recommissioning Partnership and provide innovative energy management energy solutions with a view to the long term.
The partnership approach adopted to advance this particular idea into action should act as an example to industry as a whole. Although the offshore industry in

Great Yarmouth has had to weather the economic instability of the past decade, as so often happens, adversity, if not necessity, has proved to be the mother of invention.
I believe that in years to come, the Great Yarmouth Recommissioning Partnership will be seen as the founding father of a scheme that is every bit as important to the well-being of our marine environment as recycling is to our terrestrial environment. The Yarmouth solution could turn an offshore platform from the scrap iron of the sea into a Rolls-Royce of the ocean.
Finally, I firmly believe that the scheme represents a blueprint for the future, as it brings together all the relevant agencies and industry for the benefit of the local economy, and is an example of the type of co-ordinated thinking which the Government should be encouraging.

The Minister for Science, Energy and Industry (Mr. John Battle): I congratulate my hon. Friend the Member for Great Yarmouth (Mr. Wright) on winning tonight's debate. He has done more than secure an Adjournment debate; he has become the champion for Great Yarmouth on many issues. I hardly ever enter a Division Lobby without being lobbied by my hon. Friend on behalf of his constituents and he is welcome to continue to do that. He has a particularly pioneering vision for employment possibilities in his constituency and we should all follow his example.
I was amused and encouraged by my hon. Friend's reference to a third way—a particularly resonant political theme at present—and the way in which he introduced it into the debate. He proposed the recommissioning of oil and gas installations as a third way between land disposal on shore and disposal at sea. Recommissioning should not be confused with decommissioning. It involves reuse rather than dismantling and presents a practical option which should be considered seriously.
Government policy is to presume in favour of and encourage the land disposal of redundant North sea oil and gas installations. Studies have shown that, in practice, most offshore installations will be brought on shore for reuse, recycling or disposal. The majority will be brought ashore and, as my hon. Friend suggests, reuse may then be the most attractive option for decommissioning.
It is, of course, for the operators to produce detailed proposals for the decommissioning of any particular installation, taking into account all the applicable environmental regulations and policies. Recovered equipment can be reused by the same company, sold to another operator in the UK, or even exported. As my hon. Friend said, not all equipment and structures will be suitable for reuse. Some may not provide the necessary fatigue life for economic reuse and others may simply be old technology, so the option of scrapping and recycling steel and other metals must continue to be available.
Nevertheless, it has been estimated that most gas platforms in the southern North sea are suitable for removal in one piece. Indeed, it is interesting to look at the experience in the gulf of Mexico, where, although platforms tend to be smaller than those used in the North sea, some 40 per cent. are reused. It is happening already and has been found to benefit the operators and the contractors who refurbish the platforms. Of course, it also


benefits the environment. Finally, lower costs, achieved through the reuse of platforms, mean that economically marginal fields are more likely to be developed.
There are approximately 250 offshore oil and gas installations on the UK continental shelf. The majority will reach the end of their useful lives during the next 25 years, but the peak years for decommissioning activity are expected to be between 2003 and 2012. Only a handful of platforms are likely to be decommissioned each year over the next four or five years, but there will be some demand for recommissioning in the near future. For example, the owners of the Maureen platform have recently advertised its imminent availability for recommissioning, and the Balmoral field's semi-submersible is on the market for reuse when production ceases.
It makes quite a difference, of course, if platforms are designed for reuse. I am glad to inform hon. Members that many designers and fabricators take that approach. If they can build into the design the possibility of reuse, we are halfway to resolving the problem and technological solutions can be built in. As a result, some structures have very long life cycles. For example, the British Petroleum Harding field has a jack-up platform which can be moved between developments, and Conoco's Viking-Phoenix field is using a new generation of gas gatherer minimum facilities platforms that are designed with a working life of 20 years. During that time, they will be recovered and moved to other fields when required. Reuse has been built into the design.
It is also helpful that the industry has learnt a lot about the science and engineering of fatigue assessment and structure requalification. Future buyers will have assurances about the long-term structural integrity of the products. Advanced monitoring and inspection techniques will allow companies to estimate the remaining life of the platform and topsides to assess the potential for reuse. That is welcome.
I commend the efforts of the Great Yarmouth recommissioning partnership. The port of Great Yarmouth is the principal operations centre for the southern North sea and has over 30 years' experience of gas exploration and experiment. It has participated in the load-out of numerous offshore structures and has provided quayside construction facilities to the industry. Many operators have based their southern North sea operations in Great Yarmouth. Nearly 5,000 employees work in and around Great Yarmouth in the supply chain, employed by companies such as AMEC, Kvaerner and the Wood group.
The Great Yarmouth recommissioning partnership has a strong base on which to build. The partnership includes the university of East Anglia, Amoco, AMEC, Kvaerner, UK Waste, the chamber of commerce, the Great Yarmouth port authority and other local and regional authorities and official bodies. They have been able to put

together a comprehensive picture of requirements for the removal of structures in the southern North sea and are offering the additional element of the recommissioning of equipment and jackets, so opening up possibilities for more of the currently marginal fields to be developed. That is economically and environmentally advantageous. Rather than the big companies simply hitting the big wells and then clearing off, I want the full exploration of marginal fields. The partnership can help to make it economic to develop marginal fields and get maximum use from existing fields, rather than moving away when they are only half exploited, ensuring that the UK continental shelf is properly, sensibly and environmentally sensitively exploited.
All the participants in the Great Yarmouth recommissioning partnership are fully aware of the need to take a medium to long-term view of the market for decommissioning and recommissioning and have identified the infrastructure required to meet the market demand. Most important, they have committed substantial amounts of money and resources to the project. It is an excellent example of partnership between private and public bodies, which we regularly talk about. We want to encourage partnership between local authorities and private sector companies, along with the public port authority. It is a model for other towns.
Technology has not been forgotten in the partnership. As the Minister responsible for science, engineering and technology, that is dear to my heart. I do not think that we can emphasise technology enough. New techniques are being introduced to facilitate recommissioning. I particularly welcome the fact that the Great Yarmouth Recommissioning Partnership has successfully attracted to Great Yarmouth a company that will offer and develop further a technique new to the North sea that can provide a competitive alterative to heavy lift vessels in many cases. My Department is at hand to give advice to the partnership if it wants to take further any applications for research funds. We shall give full support and back-up in the light of my hon. Friend's requests and his positive and imaginative approach.
In conclusion, I congratulate members of the Great Yarmouth Recommissioning Partnership on getting together to work in this area so positively and for spotting a market opportunity that may provide significant employment in Great Yarmouth in the early years of the next century. That is foresight. They are also dealing with new technology and addressing the need to tackle environmental challenges while providing employment. It is what I call a three-term equation of win, win, win. I commend the comments of my hon. Friend the Member for Great Yarmouth for wider consideration. I shall certainly do my best to take them further.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Twelve midnight.